In any negotiation, one party usually holds a bit more (or a lot more) power.  Try arguing with the police or a judge if you doubt that statement.  The key to achieving agreement with a more powerful side is not to bluff or threat but to offer assistance to them in achieving their goals in exchange for you achieving yours. If both parties achieve their goals, then the negotiation was NOT adversarial but interest-based.  Win-win is a theoretical possibility.

In reality, it is rarely win-win.  Typically, it is lose-a lot-less-than-I-feared, gained-some and kept-a relationship-intact situation.  But, win-win is still quite possible so long as there is a relationship of sorts on which to found it.  The parties to an interest based negotiation have to have an ongoing need or want to interact with each other for at least as long as the term of the agreement being negotiated.

Relationship, in this sense, does not mean warm or close or even friendly.  It just means functional and positive.  A divorcing couple often has such a relationship forced on them if there are children and feelings warm and fuzzy are not likely to be experienced in their new, more business-like arrangement, for instance.  But they have a relationship, nevertheless.

Greece is the less powerful of the parties at the recent negotiations regarding their escalating debt to the IMF and the EU.  The negotiations engaged by the EU were simply because of relationships, strained as they may have been.  The EU holds the debt and that put them in the cat-bird seat but only so long as the other side wanted to stay in the game and be ‘part of the family’.  The EU assumed that was a given.  The referendum indicated otherwise.  Greece stated that they were prepared to quit and take their ball and bat and walk.  On the surface, that looks like a shift in the power base and, in an adversarial negotiation where one party wins and the other loses, it just may be that.

I think it was stupid.

Regardless of the EU’s real and immediate financial losses to be suffered if Greece exits the union, the losses to Greece will be relatively greater and only exponentially increase over the short and medium time.  In the long run, their defiance may come to be seen as brilliant and heroic but there is little doubt that exiting the EU will cause them great inconvenience for a long time first.

I.e.  If a Greek merchant wanted to buy your Canadian/US product, would you accept payment in Greek Drachmas?  Of course not.  You’d say, “Pay me in Eurodollars or US dollars but I am afraid I can’t do business using your drachmas. Maybe I can’t sell to you?” Conversely, the Greeks, needing a negotiable currency will be fire-sale-ing whatever they can to get US dollars or Euros.  The country will become a target for bottom feeders.  And, of course, Greeks with any means, will leave the country in droves.  Such a scenario for the common Greek man/woman/family would be bleak and painful to say the least.

On the face of it, the Greek referendum may seem simply an opinion poll and, if Tsiparis is being strategic, he will regard it as that only.  And fuggedabout it.  In fact, he should apologize for it.  That referendum actually took away what little power he had.  In effect, it blew his feet off.  He has to backpeddle now and fast.  And he has to be good at it despite his feet being just shot off.  Here’s why:  Any negotiator on the other side now has the ultimate tough position fully justified.  Relationship has just been removed from the equation.  No quarter need be given or offered.  Merkel could legitimately say, “Well, we still kinda love you and all.  We’d like you stay in the family.  But the problem is, you now have an easy out.  A get-out-of-Europe-free-card, as it were.  You can walk anytime you want to.  Any promises you give are made weak by the permission the people have given you to quit and go it alone.  If we help you out now, throwing good money after bad, it looks like you’ll just take it and then leave the family a bit later on when things get tough again. Put bluntly, that referendum was an act of bad faith and we don’t trust you any more.  It may be in our best interests to simply quit on you rather than wait for the inevitable.”

Now Tsiparis has to grovel.  Stupid.

Negotiations are tricky business.  Those who enter them trying to win will either lose or win depending on power.  Those who enter negotiations on the basis of  building or keeping long term relationship a priority and first assisting the other side to get as much of what they want as possible are more likely to get a deal they can live with, too.  It may not be a 100% WIN but it will be a deal and a partial win.

Greece opted for the power deal instead and, they simply don’t have enough.  If I were working for them, I would be mending fences as fast as I could.  And I would hope like hell that there was still some kind of relationship upon which to build.

It doesn’t look like much relationship is left from where I sit.  Let’s hope they can hug and make up.  And they better be quick about it.