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Greek debt: why the eurozone crisis is just part of our long struggle for peace Why the eurozone crisis is just part of our long struggle for peace
(35 minutes later)
After a rollercoaster ride of cliffhanger votes, extraordinary summits and a rhetoric rarely heard beyond the confines of war, the deed, we were told, had finally been done. The prime minister, Alexis Tsipras, Europe’s anti-austerian par excellence, had, at one minute to 12, accepted the deal that would save the country from economic Armageddon. The seemingly endless eurozone crisis is coming to a head, but it won’t be completely over in the near future. In the meantime, it has unquestionably precipitated the most serious challenge to the idea of a unified Europe since the Second World War. The common currency, which was dreamed up to drive integration forward, has become a source of strain that threatens to tear apart the eurogroup and mortally weaken the EU itself. It is therefore not surprising that many people see this – for good or bad – as an existential struggle for the soul of Europe.
In this thriller of a drama that, among Greeks at least, has involved every family, every home, relief at long last could be the order of the day. A valiant war had been waged, with battles lost and battles won, but now it was almost over. Whatever happens with Greece, the way its debt has been fought over during the past five years has revealed the shallowness of any sense of political solidarity across the continent and the limited legitimacy of the EU’s political institutions. The Greeks complain about German meanness, the Germans about Greek profligacy; the French and Italians are driven by the worry that if Greece goes they may be next; while across eastern Europe people are asking why their money should go to prop up a standard of living in Athens that remains several notches higher than their own.
The nation had regained some dignity. In its battle to stay in the eurozone, all was not lost. And all of this, it is worth remembering, is about nothing more or less than money – lifeblood of a modern capitalist economy to be sure, but hardly the most uplifting or noble cause around which to fight for the soul of Europe.
On the great Greek crisis train, truth has never been that easy to identify. The first casualty of this war has been veracity, for what Greeks, and indeed everyone outside Greece, have been subjected to for the past six months is a battle of impressions waged by the masterful propaganda machine of the ruling radical-left Syriza party. Yet if we try to take the longer view – the first casualty of any crisis – it is clear that the process of European integration has always been defined as much by its crises as its successes. Eurosceptics who see red any time there is talk of “ever closer union” should remember that the phrase, first encountered in the Treaty of Rome, has functioned more like a kind of mantra to ward off evil spirits than as an operating principle. The truth is that the process of integration has never been smooth and the path forward was littered with dead ends from the very beginning.
After seeing my adopted country in freefall, after watching friends fret at the prospect of overnight impoverishment and weep at the indignity of bank closures and capital controls, it is impossible not to ask whether all – or any – of this was necessary. Did Greece need to get to this place? Did the economy need to die before our eyes for the government to declare that “honourable compromise” had been reached? In recent weeks, the spectre of chaos has haunted Greece. As Tsipras has pondered, primitive instincts have not been far away. Most historians date the origins of the Common Market to the early 1950s with the creation of the European Coal and Steel Community and the Messina conference in 1955, skating over the false starts of the previous decade. Wartime agencies that had been intended to turn into European planning bodies withered on the vine: no one today remembers the European Advisory Committee, formed while fighting against Germany was still going on, and the UN’s Economic Commission for Europe, which was once supposed to run Europe for the new world body, never got beyond publishing reports. The American effort to do the same thing started off with big ambitions but ended up with the mouse of the OECD. The Council of Europe never lived up to expectations, and the first serious effort to create a European army, the European Defence Community, failed so badly that no one has ever properly tried again since.
For truth, five years on, has arrived in the form of a €13bn package of savings – the key to further financial assistance – that is so severe, so bitter-sweet in the wake of the hardship that this “war” has already caused, it is unclear what will follow. The aspiration to “ever closer union” made a certain sense in the postwar decades when membership was small and there was much work to be done simply in bringing down barriers to economic co-operation erected during the 1930s, still isolating peoples and countries into the 1960s. It is also worth remembering how much more effectively the Common Market served to redistribute wealth than the EU has been doing: the common agricultural policy in particular recycled funds from rapidly growing urban and industrial areas to stagnant villages, softening the growing town-country divide. Later on, regional funds did much the same thing.
In return for a third bailout – this time staggered over three years and amounting to €53bn – Greeks essentially have been told to walk through the valley of the shadow of death. And that is the good scenario. The alternative – Grexit – would have bypassed purgatory but taken crisis train passengers straight to hell. The decade of the Delors presidency from 1985 saw further steps towards integration taken with relatively little fuss. These included a much higher degree of labour mobility and free trade, intensified educational exchanges, the founding of the European Bank for Reconstruction and Development, and an enhanced role for the European Court of Justice. It is true that approval of the Maastricht treaty ran into political opposition but referendum results confirmed the pro-European orientation of the public. There were examples of national opposition – Swiss hostility to the idea of joining led its government to give up the prospect of membership, while the Norwegians twice rejected the idea. But these were more than outweighed in these years by the large number of countries seeking admission.
Greeks know that the next 48 hours will define them and Europe, too. But whatever happens, they also know the choice is one between a complete march into the unknown or a conscious decision to take measures that – for a time, at least – will inflict further damage on a country already hollowed out by the eviscerating effects of austerity. Either way, the future is bleak. The resulting expansion of the EU is perhaps the main reason why the common currency has proved a challenge of a different order of magnitude to any in the past. Remember that, at its foundation, the Common Market had only six members. When Jacques Delors became Commission president in 1985 there were 10 members; by the time he left in 1994, with a single currency already under consideration, there were 16, and a decade later there were 25.
In this, Tsipras’s brinkmanship has not helped: trust is so eroded between the leadership in Athens and creditors abroad that aid, if given, will not be handed magnanimously. Almost everyone I know now fears that Greece will be left to rot in the eurozone. This truly dramatic transformation turned the EU into a genuinely European body for the first time, which was all to the good. But it vastly increased the wealth disparity across the membership and simultaneously made decision-making more complex. Above all, it meant that the proposed currency union was not simply about bringing in six more or less comparable national economies but about protecting financial stability across the continent, from Lisbon to Riga.
Politically, there is tumult on the horizon. That, in the early hours of Saturday, so many government MPs refused to give their vote to the proposed package of pension and budget cuts, tax rises and administrative reform does not portend well. There is no intrinsic reason that this could not have worked. Regional wealth disparities in the US are no less great than they are in Europe. But two things exist across the Atlantic that are absent in Europe. One is a sense of common political allegiance to the federal system – to be American means something, to be European much less. And the second, which contributes to the first, is that there are mechanisms for redistributing wealth and influence across the country as a whole.
Many Greeks may now credit Tsipras for convincing Europe’s fiscally obsessed creditors that the country’s debt burden remains the cause of its woes (as indeed it does), but that will not cut much ice with hardliners in his party. Unfortunately, the architects of the euro failed to grasp the importance of either factor. They assumed the euro would help create a sense of common identity and failed to see that the currency could as easily, in the wrong circumstances, threaten to tear the EU apart. And they devoted much more attention to the question of fiscal discipline than to the need to recycle funds. The Maastricht criteria limited the scope for Keynesian-style strategies to combat recession by prohibiting budget deficits over 3% of GDP. This rule was honoured in the breach by countries large and small but it still suggested that the architects of the euro were haunted more by the prospect of inflation and a depreciating currency than they were by the thoughts of a major depression ahead. Their own rules thus penalised the use of some of the most effective weapons in any governmental toolkit for combating unemployment in a recession.
Events have moved at such giddying speed that ironically most Greeks do not appear to blame Tsipras for ignoring the resounding rejection that he himself had urged when the economic demands of lenders were put to popular vote last weekend. The referendum, like so much else, has become part of the blanket of crisis. That the measures were less severe than the ones the government ultimately accepted has, in a further irony, been similarly played down. The warning signs were already there in the traumatic experience of the ex-Soviet Baltic states in the early years of the global crisis. Starting from a much lower base than the Greeks, the Latvians and Lithuanians were determined to join the euro and they did. But they are paying a heavy price in austerity. Why then has the Greek crisis proved so much more politically difficult for the eurozone to manage? One reason is that because they were aware of Putin on their border, the Baltic peoples were willing to put up with things. At the same time, a buoyant German economy in particular served as a cushion for emigration.
Greece, in truth, has skated so close to the edge – apocalyptic scenarios more real than ever before – that Tsipras’s spectacular U-turn has come as a welcome relief. Across an ever-fractious political spectrum, he has been applauded for putting his country before his party. In Greece, the shock was greater, the willingness to put up with it much less. And one has to factor in too the sheer opportunism of the country’s politicians, who for most of this period missed no chance to put their party interest and personal ambition above the needs of their nation.
In the event of financial rescue, the hope is that Tsipras finally tackles the maladies that have so pervasively held back the country’s potential. Like no other party in power, Syriza is well placed to tackle the age-old malignancies of tax evasion, cronyism and corruption. Faced with Greek defiance, of course, the diplomacy of the creditors’ side has turned out to be deeply unimpressive as well, peddling short-term solutions that were as much designed to improve their own financial interests as to help get Greece back on track. The austerity programme was badly conceived and evidently made matters worse than they needed to be. There is enough fault to go round.
But the leader will also face conflict on the streets. In the back alleys of Athens, where activists work in dark offices stacked with freshly painted placards and banners – the ammunition of the war against austerity – the battle is already on. “There will be demonstrations every day,” vowed Petros Papakonstantinou of the anti-capitalist bloc Antarsya. “And we will press for a general strike. That won’t be easy when the left is in power.” Whoever was to blame, it is clear that the consequences for continental solidarity have been toxic. The longer the crisis dragged on, the more it has corroded the continent’s political culture and revealed the depths of our ignorance of one another’s countries and traditions. Journalists reached for easy stereotypes – where would the papers have been without the Nazis or the Kaiser, or for ancient Greek wisdoms or Zorba? As Greek laziness met Prussian rigidity and self-righteousness, ethics became a tool of parochialism.
The stench of compromise will not only be resisted by the far left. The power of No will almost certainly be reinvigorated by unions. “All my life I have been saying Oxi,” Grigoris Kalomiris, general secretary of the civil servants’ union Adedy told me. “And now I am going to do whatever I can to oppose policies that have already resulted in wretchedness.” Faced with these rising national passions, the challenge to the euro will continue to exist, whether an agreement is patched up with the Greeks or not, since even if the euro survives it will do so in a continent of different political traditions and economic performance, and that means that a system of redistribution from surplus to deficit countries needs to become part of the culture.
A large man, with a thick grey moustache and balding pate, Kalomiris is important, not least because he sits on Syriza’s central committee. The bigger and more important question is the impact of the crisis on the future of the EU. Greece being forced out of the euro would certainly throw into question the whole irreversibility argument. But even if Greece stays in, the crisis ought to lead Europeans to think whether it is now time for a pause. At the heart of the European project is a deep ambivalence towards nationalism. Nineteenth-century theorists of nationalism saw no incompatibility between love of country and international solidarity. But that was before two world wars. Twentieth-century fathers of federalism, such as the Italian Altiero Spinelli, had a barely disguised loathing for the excesses of nationalism, which they associated with fascism and war.
“When you fight, you can lose,” he said, “but if you don’t fight, you have already lost and that would never make you proud.” We can have a little more confidence than that. Even the No vote in the Greek referendum was, so the polls suggest strongly and as the prime minister, Alexis Tsipras, has acknowledged, a vote for Europe and even for continued membership of the euro itself. And if, after five years of the worst depression since the 1930s, the Greek public still recognises the merits of participating in Europe, we can be sure public opinion in most other countries contains a solid core of pro-European sentiment. This is for historical reasons (memories of the world wars), geopolitical (fears of Russia and of fallout from the Middle East), and also because people can see that the real problems ahead lie well beyond the capacity of single states to tackle – global warming, endemic conflict in Africa and the Middle East that is generating hugely destabilising movements of people.
Greek pride has run through this crisis, the force behind the resistance that has periodically marked the country’s epic struggle to keep bankruptcy at bay. But pride is also the flipside of humiliation. And in a week that has seen them stare perilously into the abyss, it is humiliation that is haunting Greeks most. But we should not push things too far, which is precisely what the euro, at least as administered until now, has done. For one thing, it has too often been presented as just a question of signing up to rules, as if central bankers and not the elected representatives of member nations should make the fundamental decisions in any kind of democratic confederation. For another, it has lacked any redistributive or solidaristic dimension.
Never before has the Greek crisis train crossed terrain of such national division. As securities have dissipated, as the stockpiling of food and medicines has mounted, as the financial system has collapsed, the gulf between those opposing austerity and those advocating reform has widened dramatically. So, too, has the sense of victimhood among a people now firmly in the spell of anti-German sentiment. If the EU learns the lesson of the eurozone crisis and rows back from some of the more unbalanced and excessively intrusive initiatives of which the euro itself in its current incarnation has become the symbol, the Greek crisis may turn out to have been just another of those stutters that accompany any grand political experiment. But if the euro is run as before, whether or not Greece remains will not be the point. The single currency will generate the same kind of problem over time, and the kinds of politics it embodies will weaken the popularity of the idea of a united Europe still further.
It will take years – decades perhaps – for Greeks to get over this crisis. Catastrophe may have been averted, but it comes at the expense of conscious national failure: an overriding recognition that the state formed after the fall of military rule provided 40 years of peace and stability, but has ended in extraordinary ignominy. The promise of unending progress did not occur. Mark Mazower teaches history at Columbia University
Of all the truths that Greeks must now confront, that will be the hardest.