As I write, on Thursday afternoon, disarray reigns in the Eurozone… again. Astonishingly, it seems that this time it is semantics, whether to call what the Greeks are willing to accept a bridging loan or an extension of the bailout, that has caused the breach. And the fault lies squarely and firmly with the Germans. Again.
The Eurozone approach to dealing with the crisis ahs been to kick it down the road in the hope that something (better) will turn up. Germany has not objected to this at any stage, except now. Why? What has changed? The only thing that makes sense is that they have decided that a) Grexit will and must and should happen (even if nobody knows how that will happen) and b) there will be no blowback to speak of. Thus they can continue to sit truculently and say NEIN, that apparently being the German for “honourable compromise” . This has long since left the realm of economics and is now power politics of the rawest kind.
The calculation has to be that in order to show that there is no alternative any alternative must be ground into the dirt. To win is not enough – any government that dares to deviate from the ordolemmingism that passes for coordinated European economic policy must not only be defeated, it must be humiliated.
While this may ensure stability in the short term when the center can say Alles in Ordung, it is frankly toxic in the medium term.
Were Syriza to gain even a fraction of what it seeks then where would that leave the powers that be? It would greatly embolden and encourage parties such as Sinn Fein, although they are rapidly center populising as the prospect of shiny german automobiles draws near. Nobody really cares about Ireland anyhow. The eruropean center reckons that a combination of a pat on the head now and again, with the odd growl, that will keep paddy in line. What really matters is Spain, Italy and France. These matter, economically and politically. In Spain Podemos and in France Le Pen assaults the European model , from different angles. So, knee deep in the big muddy, the Eurozone rolls grimly ahead.
What is so saddening is that this threthens not just the Eurozone but the whole Schuman inspired edifice of postwar Europe. That was one where rather than be at each others throats European states would be at each others mutual aid.
Greece has enormous problems. It has cronic endemic tax evasion and avoidance issues; it is not terribly productive; it has a history of poor economic management and cronyism. It is very similar to Ireland c 1985 with more sunshine and better beaches. That said, there is a myth that Greece has taken the money and done nothing in return. Lets parse that.
First, the money issue – less than 20% of the money given to Greece in the bailout was used for day to day greek spending. A very large part of it was to pay back creditors, mostly French and German banks, who had lent it to them to keep up a lifestyle that they could not afford. A large part of that was the keeping of a bloated military stuffed with expensive franco-german toys. So, the bailout was a bailout of the banks, routed through and secured on the greek taxpayer. Sound familiar? In return, and not unreasonably, Greece was made get its house in order. That has been a horrendous experience for the inhabitants with every social indicator of misery off the scale. However, they have done it. Greece, unlike Ireland, has a primary surplus. It has reduced its costs of doing business faster and to a lower level than Ireland. It has been the most responsive of all OECD states in terms of structural reforms. It has liberalized, economized, and brutalized its way back towards economic health. And now, clawing its way over the cliff, it finds its fingers being stamped on by one nation while the others look away appaled or worse, snigger in the background glad its not them.
Greece has shown that it can do what is asked of it. What is also clear is that Germany not only cannot but will not contemplate the existence of a world in which it does what is asked of it.
A german philosopher noted that war is a continuation of diplomacy by other means. Which means of course that diplomacy is a phase in the game as is war. Germany has a long tradition of winning brilliant tactical battles, and losing every war. But, this time is different…
A version of this was published in the Irish Examiner 21 February 2015