The Greek crisis leads directly to the larger questions of Germany’s role in Europe, and Europe’s role in a changing world.
In this essay I will seek to provide some ideas that might help answer four important questions. They are the following, in ascending order of geopolitical significance: first the Greek question, second the German question, third the European question, and finally the global question.
On the Greek question: after arduous and often hostile negotiations, the leftist Greek Prime Minister Alexis Tsipras capitulated to the hard line of European creditors, prompted by Germany. It is difficult for me to fathom his logic, although many commentators have tried to excuse his behavior under pressure. From his own political perspective, the act was nothing less than a spectacular turnabout. After vociferously campaigning for a Greek rejection of austerity, he then accepted austere measures in exchange for a bailout that will prevent –temporarily—the country from going bankrupt, plain and simple. A sincere default (or the threat thereof) would have opened the path of Grexit from the Eurozone and perhaps also from the European Union, but not necessarily. In retrospect, it would seem that the tactical mistake of the Greek politician was precisely to lump together two different exits: the exit from a single currency –the euro– which, like the erstwhile Argentine “uno a uno” currency board, acts as a straightjacket impeding recovery. The second was a more serious exit from the European Union altogether. The two are linked, but not indissolubly. There are several countries in the EU that have kept their own currencies –e.g. the Nordic kroners or the British pound—and therefore have greater flexibility in their economic policies. It is now obvious that throughout Mr. Tsipras spoke loudly but carried a small stick. The Germans called his bluff.
After securing a resounding “No” to austerity in a referendum, he turned around and did what his center-right predecessors did in previous failed attempts to stave off the collapse of the economy as presently constituted. The present “deal” only postpones another crisis, like the ones before, and so on until the end of time. It also gives the impression that the European Union is not about unity and solidarity but about denial and postponement. In my queries and research I have not found any good argument to the effect that a return to the dracma –tough as that could be– would not have helped some recovery from depression, at least in the short run, while giving Greece a productive waiting period in which to negotiate a significant reduction of the underlying debt, and begin some indispensable structural reforms. The move would have shown good leadership, national determination, and paradoxically it would have gained Greece more trust from the rest of the world.
The Greek “deal” is unsustainable and will only deepen the depression that has the most vulnerable sectors of Greek society suffering extreme hardship, so much so that the German-propelled measures already constitute a willful violation of human rights. Some other Europeans –fearful of the human cost—have already prepared “humanitarian” measures of relief. And here is another analogy: Germans may have managed to induce Europe to treat Greece like the Americans treat Puerto Rico (also bankrupt today): as a “free associated state” that is neither free, nor associated, nor a real state.
But Greece –a small Balkan nation with a population equivalent to that of Chile—is mere cannon fodder in a larger war. And here we come to the second question –the German question. Once again, this war is inside Europe, and the German “triumph” in Greece is the opening salvo. This time the war is being fought with banks instead of cannons, and German financial actions are the modern equivalent of its erstwhile military might. Once again, Germany is playing with fire, and its historical geopolitical precedents do not augur well either for Europe or for Germany itself. Thoughtful German critics like the philosopher and sociologist Jurgen Habermas have said that in being “tough” with Greece, the Merkel administration may have thrown overboard the good will that Germany patiently regained from the world after the last big war.1 For we must consider the larger question: since its founding as a state, Germany’s contributions to the peace, prosperity, and stability of the region and the world are only recent and reticent, from Konrad Adenauer and Willy Brandt to Helmut Kohl.
As I said, this “war” is being fought on the financial front, and the battle of Grexit is but one skirmish. Let us keep in mind that Mme Lagarde is French, and was the finance minister of her country before assuming the leadership of the IMF. The French government –even in its present rather weak version—is aware that the Greek “deal” is a German disciplinary measure –others will call it power grab– aimed at the weaker Eurozone partners, and not only Ireland, Spain, Portugal, and Italy, but at France itself. Brussels is a fig leaf for German hegemony. It would seem that a German Europe is about to be born.
But is it? Consider the posthumous essay by another thoughtful German sociologist, Ulrich Beck.2 He paints a bleak picture if the present German course is pursued. Mere economic imposition is not true hegemony, especially if the German-sponsored economic recipes are pro-cyclical and lead to a dead end, as economists Paul Krugman and Joseph Stiglitz have repeatedly warned.
And here we come to the third question: the European question. In their pursuit of a moralistic, disciplinarian, and economically mistaken recipe, the German politicians miscalculate the blow back. The example of Greek humiliation will produce a strong nationalist response in various guises, some of them dignified (e.g. the defense of cultural autonomy and sovereignty, as in Scotland and Catalonia), some utterly unpleasant (i.e. outright fascist, as in France or Hungary, and in Greece itself), and some somewhere in between, like the British UKIP. These responses will fragment Europe further, which ironically is the opposite of the Brussels-Berlin project. An eventual failure of the Greek left-wing government will open the path for the continued rise of the extreme right, which is racist, xenophobic, and authoritarian. For what can we expect when Berlin imposes, Brussels equivocates, and Athens capitulates?
Europe’s foibles come at the worst possible time for the construction of a new world order, for it forfeits the opportunity to manage the enormous challenges presented by the relative decline of the United States, the pivot of geopolitics towards a still problematic if resurgent Asia, and the implosion of the Middle East. This is the fourth and largest question. To start facing it, I recommend the contribution of yet another thoughtful German sociologist, Wolfgang Streeck.3
Sic transit gloria mundi, in its relentless pursuit of folly.
NOTES
1 See http://www.theguardian.com/business/2015/jul/16/merkel-gambling-away-germanys-reputation-over-greece-says-habermas?CMP=share_btn_link
2 Ulrich Beck, German Europe, London: 2013. See also https://www.stratfor.com/weekly/new-drivers-europes-geopolitics
3 Wolfgang Streeck: How Will Capitalism End?. New Left Review 87, May-June 2014