|Various Euro bills. (Photo credit: Wikipedia)|
The Eurogroup and the International Monetary Fund have crushed the hopes of a youthful movement that sought to transform a nation and rouse a continent.
Beyond the shock that events in Greece have given supporters of the European project, there are other noteworthy features.
The EU is becoming increasingly authoritarian, as Germany imposes its wishes and obsessions unchecked. Though founded on a promise of peace, the EU seems incapable of drawing lessons from history, even when recent and violent; what matters most to it is sanctioning bad debtors, and the headstrong.
This amnesiac authoritarianism is a challenge to those who saw the EU as the place to experiment with going beyond the framework of the nation state, and achieving democratic renewal.
At the outset, European integration lavished material advantages on its citizens, against a backdrop of the East-West confrontation. In the immediate post-war period, the project was driven forward by the US, which sought a market for its goods and a buffer against Soviet expansion.
The US recognised that if the “free world” wanted to compete effectively with the “democratic” republics of the Warsaw Pact, it had to win hearts and minds, which meant demonstrating its goodwill through social policies. Since this strategic lifeline disappeared, Europe has behaved like the board of directors of a bank.
Some participants in the cold war, such as NATO, survived the fall of the Berlin Wall by inventing new monsters to destroy on other continents. The EU’s institutions have also redefined their enemy.
The peace and stability they claim as their objective now demand peoples be politically neutralised, and their remaining tools of national sovereignty destroyed. This means integration at the pace of a forced march, the burial of political questions in a one-size-fits-all treaty, a federal project. This venture is not new, but the Greek case illustrates the brutality with which it is now being pursued.
“How many divisions does the pope have?” was reportedly Joseph Stalin’s dismissive response to a French leader who urged him to deal tactfully with the Vatican. The states in the Eurogroup now seem to be applying the same approach to Greece; reckoning that the government they find so exasperating would be unable to defend itself, they have destabilised it through enforced bank closures and import suspensions.
Relations between members of the same union, who belong to the same institutions, return representatives to the same parliament and use the same currency, should preclude such machinations.
Yet the Eurogroup countries, with Germany at their head, safe in the knowledge of their superiority, imposed a diktat on a weakened Greece which everyone acknowledges will worsen most of its problems. This whole episode exposes just how deep the cracks in the EU go (1).
When Syriza won January’s election, it was right on almost every single count. Right to link the collapse of the Greek economy to the austerity programme administered for five years by both socialists and the right. Right to argue that no state with a crumbling manufacturing sector would be able to rebuild itself if it had to devote increasing sums to paying off its creditors. Right to point out that in a democracy sovereignty belongs to the people and that if a policy is imposed on them despite what they decide, it constitutes an act of dispossession.
Can’t pay, won’t pay
Syriza appeared to have an unbeatable hand, but success depends on who you are playing with. In the EU, Syriza’s aces were turned against it; Syriza was compared to southern Marxists, so out of touch with reality that they dared question the economic assumptions that underlie German ideology (see Germany’s iron cage).
The weapons of “reason” and conviction are useless in such circumstances. What’s the good of pleading your case in front of a firing squad? During the months of “negotiations”, the Greek finance minister Yanis Varoufakis noticed his European counterparts stared at him as though they were thinking: “You’re right in what you are saying, but we are going to crush you anyway” (2) (see The defeat of Europe).
However, the success (for now) of Germany’s plan to relegate Greece to the status of a Eurogroup protectorate is also the result of failed gambles by Greece’s leftwing majority, in the over-optimistic hope of changing Europe (3).
The gamble that the leaders of France and Italy would help Greece overcome the German right’s monetarist taboos. The gamble that other European peoples, overwhelmed by austerity policies, would pressure their governments into a Keynesian reorientation (Greece thought it was the torchbearer for this). The gamble that this change would be conceivable within the eurozone; noexit scenario had been envisaged or prepared. And the gamble that intermittent hints of a “Russian option” would, for geopolitical reasons, contain Germany’s temptation to punish Greece and encourage the US to stay Germany’s hand. At no point did any of these gambles seem likely to pay off. It’s not possible to hold off a tank with violets and a catapult.
Greece’s leaders, guilty only of being too innocent, thought that creditors would heed the democratic will of the Greeks, especially the young. The legislative election of 25 January and the referendum of 5 July, however, provoked dumbfounded outrage among the Germans and their allies. They had only one remaining aim: to punish the rebels, and anyone who might be inspired by their bravery.
Capitulation was no longer enough; there had to be apologies (Greece has admitted that its economic choices caused a breakdown in confidence with its partners) and even reparations: public assets, capable of being privatised, to a value equal to 25% of Greek GDP are to be pledged to the creditors. Everyone claims to be relieved: Greece will pay.
“Germany will pay” was the phrase French finance minister Louis Klotz whispered to President Clemenceau at the end of the first world war. It became the watchword of French savers who had lent to the Treasury during the conflict. They had not forgotten that in 1870 France paid the whole of the tribute demanded by Bismarck, though the sum was higher than Germany’s costs. This precedent inspired French prime minister Raymond Poincaré when, frustrated at not receiving the reparations stipulated in the Treaty of Versailles (4), he decided to occupy the Ruhr in 1923.
John Maynard Keynes had already grasped the vanity of such a policy of humiliation and seizure of securities: Germany did not pay because it could not pay, and the same goes for Greece now. Only through time, with a positive balance of payments, could Germany have paid off its massive debt.
France refused to allow its rival’s economic rebirth, which would have enabled it to pay, but also to finance an army, risking the possibility of a third bloody conflict. The economic success of the Greek left would hardly have had such dramatic repercussions for Europeans, but it would have scotched eurozone leaders’ justifications for austerity.
A ‘totally non-viable debt’
After a year, Poincaré had to raise taxes by 20% to fund his occupation, a cruel paradox for a rightwing leader opposed to taxation who had insisted Germany would pay. He lost the next election and his successor evacuated the Ruhr.
No-one has yet imagined such consequences in any of the countries that have crushed Greece to make it settle a debt that even the IMF admits is “totally non-viable”. Yet the Eurogroup countries’ fixation on punishment has already obliged them to commit three times the sum (around €86bn) required had funds been released five months earlier; in the meantime the Greek economy had collapsed through lack of liquidity (5).
So the price of German finance minister Wolfgang Schäuble’s inflexibility will be almost as high as Poincaré’s. But Greece’s humiliation will serve as an example for other potential offenders (Spain, Italy, France?). It will be a reminder of the “Juncker theorem” formulated by the European Commission president, Jean-Claude Juncker, four days after the Greek left’s electoral victory: “There can be no democratic choice that is counter to European treaties” (6).
One bed is too narrow to accommodate 19 different dreams. It was an almost imperial undertaking to impose the same currency on Austria and Cyprus, Luxembourg and Spain, on peoples who do not have a shared history, political culture or standard of living, the same alliances or languages.
How can a state conceive an economic and social policy that is open to debate and democratic negotiation if all the mechanisms of monetary regulation are outside its control? How can peoples who may not even know each other accept a degree of solidarity comparable to the inhabitants of Florida and those of Montana? The whole thing rested on a hypothesis: that federalism at an accelerated pace would bring European peoples together.
Yet 15 years after the creation of the euro, animosity has never been greater. So much so that, when Tsipras announced his referendum, he used language like a declaration of war - “a [Eurogroup] proposition in the form of an ultimatum addressed to Greek democracy” - and accused some “partners” of seeking to “humiliate an entire people”. The Greeks massively backed their government and the Germans rallied behind the quite opposite demands of their government. Could their destinies be any more closely linked without risking domestic violence?
But the hostility is no longer just between Greece and Germany. “We do not want to be a German colony,” insisted Pablo Iglesias, leader of Podemos in Spain. Italy’s prime minister Matteo Renzi - whose reticence throughout has been noteworthy - let slip: “I say to Germany: that’s enough. Humiliating a European partner is unthinkable.”
According to German sociologist Wolfgang Streeck, “in Mediterranean countries, and to some extent in France, Germany is more hated than at any time since 1945. ... Economic and monetary union, which was supposed to consolidate European unity once and for all, now stands a good chance of shattering it” (7).
‘You’ve done too little, too slowly’
The Greeks are attracting hostility, too. Junker is said to have told Tsipras: “If the Eurogroup functioned like a parliamentary democracy, you would already be out, because that is what nearly all your partners want” (8).
Using a well-known conservative mechanism, now deployed at nation-state level, poor states have been encouraged in their mutual suspicion that others, like the proverbial “welfare chiselers” of Ronald Reagan’s speeches, are living at their expense.
The Estonian education minister castigated Greece: “You’ve done too little, too slowly, and much less than Estonia. We have suffered much more than Greece. But we didn’t stop to complain; we just got on with it” (9). The Slovaks were aggrieved at the level of pensions in Greece, which should be “finally declared bankrupt in order to clear the atmosphere,” as the Czech finance minister kindly suggested (10).
Pierre Moscovici, the French Socialist and EU commissioner for economic and financial affairs, eagerly repeated an anecdote to any listening journalist: “At a Eurogroup meeting, a Lithuanian socialist minister told Varoufakis, ‘It’s very nice that you want to raise the minimum wage by 40%, but your minimum wage is already twice ours. And you want to raise it with money you owe us, with debt.’ And that’s a pretty strong argument” (11).
A strong argument indeed, especially coming from Moscovici whose party had announced only a year earlier: “We want a Europe which protects its workers. A Europe of social progress, not social roll-back.”
At a European Council meeting on 7 July, several EU leaders conveyed their exasperation to Tsipras: “We can’t take any more. Greece is all we’ve talked about for months. A decision needs to be taken. If you’re incapable of taking it, it will be taken for you” (12). Is that not already a rough and ready brand of federalism? “We must go forward,” Hollande concluded from this. In which direction? The same as always: “economic governance”, “a eurozone budget”, “convergence with Germany”.
In Europe, when a medicine severely damages the economic or democratic health of a patient, the dose is doubled. Therefore, since, according Hollande, “the eurozone has been able to reaffirm its cohesion with Greece, the circumstances are leading us to speed up” (13).
To leftwing activists and trade unionists, stopping and thinking seems a better option. Even for those who fear that an exit from the euro would encourage the break-up of the European project and the revival of nationalisms, the Greek crisis demonstrates that a single currency stands againstpopular sovereignty.
Far from containing the far right, such an obvious realisation encourages it, since the far right mocks its enemies’ lectures on democracy. How can anyone imagine that the single currency could one day accommodate a progressive social policy, having seen the plans that the Eurogroup states gave Tsipras to force this leftwing prime minister to implement rigid neoliberalism?
Once Greece raised big, universal questions. Now it has revealed the true face of the Europe we no longer want.
(1) See Frédéric Lordon, La Malfaçon: Monnaie européenne et souveraineté démocratique (Production Defects: the European Currency and Democratic Sovereignty), Les Liens qui Libèrent, Paris, 2014.
(2) New Statesman, London, 13 July 2015.
(3) See Serge Halimi, “A modest and crazy dream”, Le Monde diplomatique, English edition, February 2015.
(4) See Serge Halimi, “A Versailles, la guerre a perdu la paix” (At Versailles, the war lost the peace), Manuel d’histoire critique, Editions Le Monde diplomatique, 2014.
(5) “Europe reaches rescue deal for Greece”, The Wall Street Journal, New York, 14 July 2015.
(6) Le Figaro, Paris, 29 January 2015.
(7) Wolfgang Streeck, “Germany can’t solve this alone,” Le Monde diplomatique, English edition, May 2015.
(8) Libération, Paris, 11-12 July 2015.
(9) The Wall Street Journal, 13 July 2015.
(10) Le Figaro, 3 July 2015.
(11) France Inter, 1 March 2015.
(12) Reported in Le Figaro, 9 July 2015.
(13) Le Journal du dimanche, Paris, 19 July 2015.