[Marxism] Deal on Greek Debt Crisis Exposes Europe’s Deepening Fissures

Louis Proyect lnp3 at panix.com
Mon Jul 13 14:56:52 MDT 2015

NY Times, July 13 2015
Deal on Greek Debt Crisis Exposes Europe’s Deepening Fissures

LONDON — Chancellor Angela Merkel of Germany said about Greece on Sunday 
that “the most important currency has been lost: that is trust and 
reliability.” But many Germans think the most important currency that 
has been lost is the deutsche mark, the symbol of rectitude and 
confidence that embodied West Germany’s ascent from the ashes of World 
War II.

That same sense of solidity is badly lacking in the European Union as it 
confronts the limits of its ambitions, and Monday morning’s painful deal 
on Greece seems unlikely to restore it.

The latest effort to preserve Greek membership in the eurozone has only 
deepened the fissures within the European Union between north and south, 
between advanced economies and developing ones, between large countries 
and smaller ones, between lenders and debtors, and, just as important, 
between those 19 countries within the eurozone and the nine European 
Union nations outside it.

In the name of preserving the “European project” and European 
“solidarity,” the ultimatum put to Greece required something close to 
the surrender of the nation’s sovereignty. For all of Greece’s past 
sins, and for all of the gamesmanship and harsh talk of the governing 
Syriza party, this outcome arguably had elements of punishment as well 
as fiscal responsibility.

Whether this is good or bad for Greece, in the end, the Greeks will 
decide. But it averted an outcome that could have left Europe even more 
badly fractured. And it highlighted the willingness of some leaders to 
make a compelling case for unity over narrow national interest, 
especially President François Hollande of France, who played an 
important role in mediating between Germany and Greece.

Unpopular and yet contemplating another run for the presidency in 2017, 
Mr. Hollande displayed leadership and distanced himself from Ms. Merkel 
and German demands, which many in Europe, especially in France, saw as 
selfishness and even vindictiveness.

On Monday, Mr. Hollande said that “even if it was long, I think for 
Europe this was a good night and a good day.” That is true, given the 

But it will be even better if the European Union can now, after so many 
years, lift its head from its euro crisis and begin to concentrate on 
other critical issues: providing economic growth and jobs for its young 
people, a rational and unified policy on migration, a response to 
Russian ambitions in Ukraine and elsewhere, and a British vote on 
whether to leave the European Union.

A so-called Brexit — an exit by Britain, which is expected to overtake 
France as Europe’s second-largest economy and is one of Europe’s main 
military and diplomatic actors, with a permanent seat on the United 
Nations Security Council — would be far more damaging to the European 
Union than the departure of small, difficult Greece.

Britain, which never joined the euro currency bloc, plans to hold a 
referendum by the end of 2017 on whether to remain a member of the 
European Union, and Prime Minister David Cameron is negotiating now to 
change Britain’s terms of membership. The mess over Greece has hardly 
helped the reputation of the European Union inside Britain, but it may 
also help Mr. Cameron secure a better deal.

And the challenge to the post-Cold War order in Europe posed by a newly 
revanchist Russia is a bigger threat to European ideals of peace and 
stability than Brussels seems to understand.

Together with the migration crisis and Greece, these represent “the four 
horsemen” circling around Europe’s future, said Rem Korteweg of the 
Center for European Reform, a research institution based in London.

“The four horsemen threaten the E.U. precisely because they raise issues 
that can only be solved if governments prioritize a European solution 
over narrow national agendas,” he said. “If a European answer cannot be 
found, the horsemen will continue to promote chaos, instability and 
mutual recrimination” within the European Union.

As for Ms. Merkel, her reputation hangs in the balance, at home and in 
her role as Europe’s de facto leader. Having rejected a Greek exit from 
the eurozone three years ago in the name of European solidarity, she has 
again avoided that outcome. This time, she risked considerable cost to 
her political standing at home. But what would really damage her legacy 
is another expensive bailout for Greece that fails.

The crisis that played out over the weekend was just the latest in a 
series that traces back to the origins and nature of the currency union.

When Germany under Chancellor Helmut Kohl gave in more than two decades 
ago to the entreaties of President François Mitterrand of France and 
agreed to give up the deutsche mark for the new common currency, the 
euro, he did so for the same reason Mr. Kohl had agreed earlier to trade 
one East German mark for one West German mark: politics.

Economics was never the most important issue, and Mr. Kohl and Mr. 
Mitterrand ignored the voices that warned against a common currency 
without common financial institutions or fiscal policies in a set of 
widely varying economies.

Greece was allowed into the eurozone for largely the same reasons, 
wishful politics, that put ancient Greece, the core of European culture, 
at the heart of a European ideal built on civilization and peace. The 
fact that today’s Greece bears little relationship to the country of 
Socrates or Pericles was simply ignored. And so was clear evidence, 
well-known at the time in Brussels, that the Greeks were regularly 
faking their budgetary figures to qualify for the euro.

The magical thinking involved was that the euro, somehow shorn of 
politics, would bring all these different economies into closer balance. 
The last decade has proved that to be illusory. And Monday’s deal — if 
it is ratified by an angry Greek Parliament, and by an unhappy German 
Parliament, and not derailed by smaller countries like Finland with 
coalition governments that depend on the support of euroskeptic parties 
— will avert the debacle of a country leaving the common currency for 
the first time. But by itself, it will do little to strengthen the 
future of the euro, and it might simply prolong the agony and deepen the 

For many in Europe, the euro’s economic benefits have been offset by the 
constraints it imposes. For the weaker economies in particular, it has 
become a sort of prison, limiting the ability of elected governments to 
use budgetary policy to smooth out the ups and downs of the economic 
cycle and eliminating their use of currency fluctuations to help manage 
national economies.

For Greece, the crisis five years ago was a chance to create a modern 
democratic capitalist state, which was one of the reasons to join the 
European Union in the first place. Many Greeks suffered, the debt 
mountain grew, and finally, as long predicted, the economic squeeze 
produced a political revolt — and just as Greece finally seemed to have 
turned an important corner and was running a primary surplus, in other 
words, financing its current budget and having something left over to 
pay its debts.

The victory in January of Prime Minister Alexis Tsipras and his Syriza 
party led to the reversal of some critical economic overhauls demanded 
by creditors, threw the Greek economy backward and raised even higher 
the requirement for further loans. Mr. Tsipras bet big but lost. But so 
have the Greeks.

It is one thing to undergo changes when a government and a people have 
bought into them as necessary and hopeful — this is how the Baltic 
nations took the pill of economic austerity and overhaul, and this is 
largely how Ireland, Portugal and Spain saw matters, too, when faced 
with implosion.

But it is a far different thing to have further social changes and 
austerity shoved down one’s throat in an exercise of political power and 
domination, as many Greeks are no doubt interpreting this deal. Carrying 
out these changes will feel like enforced labor to many Greeks, and 
especially to the Syriza government, if it survives at all.

As Samuel Johnson said about second marriages, this prospective third 
bailout of Greece is a triumph of hope over experience. Even more so 
with Mr. Tsipras and Syriza, their protestations of mandates and 
sovereignty thrown back into their faces by European colleagues offended 
by Syriza’s moralizing, and even more, by its gamesmanship.

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