Europe's Future Hangs On Who's Got The Best Bluff

If political brinkmanship could be summed up in a single book, entire chapters would be dedicated to the practice of claiming the other guy is bluffing.

As part of a wider strategy of power, it's an elegant, simple tactic that comes with a certain amount of self-reinforcing clout. Simultaneously below-the-belt and sublime, it's the kind of statement that makes the person issuing it appear as both perfectly rational and dangerously insane: the other guy is bluffing because his convictions are not strong, because he's a natural-born liar, because he cannot deliver on his promises. At the same time: I'm not bluffing, even though I'd be crazy not to, because I believe in my cause that passionately.

Surviving through half a century where mutually assured destruction was a given, the other guy is bluffing is clearly alive in 2012, be it coming through obliquely in the snide remarks of Republican Congressional leaders threatening to cause a sovereign default of the United States or expressed plainly in the full-throated chants of Russian activists testing the Kremlin's ban on demonstrations with flashmob yoga assemblies-cum-protests.

Nowhere on the planet, however, is this convoluted maxim of democratic gamesmanship being played out as splendidly as in Greece.

As that nation's citizens head into the polls Sunday for what could be the defining election of Europe's 21^st-century history, the party poised to win the plurality of seats -- a left-wing coalition known as SYRIZA -- has based its extraordinary rise to popularity on the idea the the other guy is bluffing.

Specifically, SYRIZA is selling the Greek people on the idea that they have the power to demand a revision to the bailout agreement signed by the previous government, a hated document in Athens commonly referred to as the memorandum, and sue for better terms ... and that this will not lead to an expulsion of the country from the euro zone, as other European leaders have more or less promised.

Alexis Tsipras, the fiery leader of the party, reiterated just such a position in a speech Thursday night -- the final rally before voters cast their ballots. After accusing the previous government of looting Greece and lowering the Greek flag and giving it as a trophy to Angela Merkel, the German chancellor, Tsipras vowed once again to face down the people who provided his country with its strings-attached bailout. And win.

Merkel is scared because she will not be faced with people saying yes to everything, he said, later adding, a message to market speculators waging such an action would result in Greece leaving the common currency union: Don't bet on Greece leaving the euro zone. You will lose.

Yiannis Bournous, head of European policy for the party, was even more explicit in an interview with London's The Guardian, saying Germany was ''daring the other side to push the button'' without being prepared to trigger the nuclear option of denying Greece upcoming bailout payments.

We knew the German government would push as far as possible with the pressure against the Greek people and its terrorising campaign on how to vote, he said, adding, If we win, things change in Europe.

That rhetoric fits nicely with the views of the vast majority of Greeks. An early June poll conducted by Athens newspaper Friday-13 found 54 percent of Greeks believe it will be possible to renegotiate a better deal, which is actually somewhat down from previous surveys. At the same time, opinion measures have consistently found more than three-quarters of the country wants to stay in the euro.

The other guy is bluffing, then, appears to be a way to reconcile those disparate hopes.

But it's not just Tsipras and SYRIZA who are playing that card.

While the leaders of other European countries have been mostly circumspect in specifically stating that Tsipras and his party have nothing going for them other than a world-class poker face -- Bundesbank president Jens Weidmann being perhaps the exception -- the opinion that it is SYRIZA who is actually bluffing has come in vogue in the Greek press as of late.

Thursday, for example, Stefanos Manos, the leader of the small liberal party Drasi that espouses common sense as an ideological basis, said Tsipras would not actually seek to fight most conditions of Greece's bailout deal if it came to power, arguing such a move would endanger the salaries and benefits of the government workers and unemployed Greeks that form his electoral base

SYRIZA's customers are the civil servants, public enterprise employees and academics. Tsipras has to ensure that he can pay their wages. I wouldn't worry at all [about the bailout being rejected].

Talk, of course, even talk suggesting historically significant political strategies, is cheap. But now, according to at least one analyst of Greek politics, some players are putting a dear amount of money behind their bluff.

That's because Thursday, the Athens Stock Exchange had a mind-bending rally, with the benchmark index going up 10.75 percent. The mainstream financial media interpreted the huge jump by noting there had been rumors of secret polls -- official electoral polls, by law, are forbidden in Greece two weeks prior to the election -- showing the pro-bailout parties were likely to coast to an easy victory Sunday.

Dimitris Pantoulas, a political scientist at the British University of Bath, sees it differently, suggesting deeply entrenched capital interests in the country might have coordinated to give the stock market an artificial boost -- a situation that is not unprecedented in Athens -- so as to give credence to the idea the markets believed SYRIZA would lose.

Tell-tale signs that could have happened include the fact the rally was almost exclusively supported by Greek funds, and trading volume was low for a rally. There's also the matter of the tiny size of the Greek equity market: while moving the S&P 500 up 10 percent in a session would require trillions of dollars to be injected into U.S. stocks, for example, the total capitalization of the Greek equity markets is about 21 billion euro, meaning executing such a strategy would cost, at most, several million euro.

There is always a manipulation in specific moments, where the stock exchange plays an important role. I don't think this time the government, but definitely capital that is close to the government, Pantoulas said.

More broadly, he opined the prevalence of such bluffing, and claiming the other guy is bluffing is part and parcel of the messy Greek political system, where leaders are always getting ready for the next negotiation, and accepting a status quo that can't later be revised is anathema.

He traces the fall of the last government, for example, not to the day it gave in to harsh austerity demands in exchange for a bailout, but to the moment it publicly stated we have to follow what the troika is saying because that's the way it has to be.

I think they are building their positions for their future negotiations after the election, Pantoulas said, All of them, they are looking at Monday, rather than Sunday.