Thursday, February 26, 2015

Varoufakthis or Negotiating the Greek Way

Since January 26th, 2015 Greece has a new Government. A Government promising a radical new way of fighting the debt crisis of Greece. And the showdown with the Euro Group was started immediately.
Why is it that every time we pick up the phone some Troika jerk tells us they want their money back? When we ain’t got none.
C’mon Yanis, Varoufakthis!
Immediately, it became interesting to watch the unfolding of an unusual way of negotiating. Something none of the leaders of the Euro Group and the EU was prepared for. And this strategy has a name: Varoufakthis.
The numbers, based on what has been published, speak loud and clear: Greece will not be able to ever pay back its debt. Period. And by the way: which one of the other EU members actually can? Meanwhile, everyone interested in the facts by now should understand the implications of that situation. Yet, with Greece it’s worse. Greece is actually broke. That’s the situation.
Why is it that every time we want to borrow some more money, the IMF and the ECB look at us like we are robbing the bank?
C’mon Yanis, Varoufakthis!
Knowing how to negotiate is essential for any leader. Understanding the mechanics and dynamics. Look at it from a game perspective. Taking the negotiation between the Euro Group and Greece as an example:
The Player ‘Euro Group’:
  • Has a specific desired outcome “A” in mind.
  • Based on this outcome certain actions are determined and decided.
The Player ‘Greece’:
  • Has a specific desired outcome “B” in mind.
  • Based on this outcome certain actions are determined and decided.
However, it’s never that simple:
The Player ‘Euro Group’:
  • Has a specific desired outcome “A” in mind.
  • Has a perceived understanding of Player ‘Greece’ desired outcome “B”.
  • The perceived understanding of Player ‘Greece’ desired outcome “B” has a decisive impact on determining and deciding its actions.
  • Based on this the original actions are altered significantly to cope with that situation and still being able to reach the goal.
The Player ‘Greece’:
  • Has a specific desired outcome “B” in mind.
  • Has a perceived understanding of Player ‘Euro Group’ desired outcome “A”.
  • The perceived understanding of Player ‘Euro Group’ desired outcome “A” has a decisive impact on determining and deciding its actions.
  • Based on this the original actions are altered significantly to cope with that situation and still being able to reach the goal.
Add to this the different people making up the players it becomes pretty complex.
Why is it that every time the Euro Group talks with us it feels like they want to talk about nothing ?
C’mon Yanis, Varoufakthis!
The Euro Group is by no means homogeneous. It’s made up of members of the Governments of the different countries. And each one of them has a hidden agenda of their particular Government. And take it also for granted that each one of the members has their own agenda as well driven by their own motives.
The same goes for Greece. Even though it appears to be the case that just two people have the saying. That’s not entirely true. There are their political parties and other constraints. And each one of these two has also an agenda of their own driven by their own motives.
In this game called ‘negotiation’ someone establishes the rules. In this case these rules were made by the Euro Group together with the IMF. Hence, in order to rest your case you must follow these rules. Unless you don’t.
Why is it that every time the Euro Group wants us to follow their rules?
What rules?
C’mon Yanis, Varoufakthis!
And Greece played ‘not following the rules’. That gave the negotiations quite a different twist. And an unexpected one. You could call that ‘disruptive’.
When players play their games they are concealing their true motives to the other parties. Each one of the Euro Group does it. And so does Greece. Targeted deception. Greece is facing a powerful player which seems to have all the good cards in its hands. And maybe they have. Which leaves next to nothing to Greece. That means for Greece that they must play this game differently. Exploiting the impossible and the unexpected. Leaving the opponent in ambiguity what game is really being played.
Why is it that every time the Euro Group wants us to sign an agreement? When the only thing we want is minding our own business?
C’mon Yanis, Varoufakthis!
Coda:
This is just a sneak peak into the ‘game of negotiation’. Regarding that case there are a few questions one should ask. For instance -
  • What are the true motives of someone wanting to become elected to govern Greece in such a situation?
  • What are the true motives of each one of the members of the Euro Group?
For the new Greek Government the choice was to just do what was always done. And then to just get what they always got. They know that Greece cannot pay back what they owe. They know that Greece is actually broke. They understand well the magnitude of problems in Greece. And they know that anything else but a radical cut will just prolong the suffering indefinitely. With that in mind they decided to play a risky, dangerous game. They are aware of that. But they see it as their only chance to win the game. It's hard to play poker if you have nothing in your hands and your opponent knows that.
The Euro Group has different goals in mind. And the same goes for each member of the Euro Group. Interesting in that context is observing the type of language used in the different statements. They appear united and poised to save the Euro and keeping Greece within the Euro Group. Or are they? They seem to be prepared for whatever might come up. Even the so-called ‘Grexit’ they claim they don’t want at all. Unless they do.
Next time you negotiate something keep this example in mind.
It's mandatory for any leader to understand negotiation. Game theory is one part. It only works if you also understand the psychology of human beings, which determines what they might be up to or how far they might go under any given circumstances.

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