Asleep at the euro-wheel

Germany isn’t Greece’s main problem – Greece’s finance minister isn’t Germany’s main problem, either.

Greek Finance Minister Varoufakis and German Finance Minister Schaeuble address news conference at the finance ministry in Berlin
Do Greece and Germany have the luxury of constantly trying to poke each other's eyes out? asks Tzafalias [REUTERS]

To an outsider, Europe’s resurgent crisis resembles the most self-absorbed kind of first world problem. The main manifestation of this is the ongoing spat between Germany – Europe’s strongest economy – and Greece, the continent’s financially most troubled.

Before proceeding with the euro currency bloc’s most raucous couple, what else is at play? Projections show that upcoming local elections in France will render the anti-immigrant and anti-euro National Front the country’s dominant political force. This had to do less with an overt turn to the far right than with the electorate condemning the current administration’s austerity and foreign relations policies.

In May, one of the things British voters must decide is whether they can reverse deeper integration with their European partners without antagonising them. Moreover, the latest growth forecast by the OECD association of developed countries is in essence reserved as to its expectations of recovery, concurrently mentioning “modest acceleration” and “storm clouds on the horizon”. Oh, there is also the turmoil in Ukraine, Syria and Libya that Europe needs to confront.      

Inside Story – Does Germany owe Greece over Nazi occupation?

Asphyxiated economy

So given current conditions, do Greece and Germany have the luxury of constantly trying to poke each other’s eyes out? The Greek economy is asphyxiated. Credit has dried up and more and more people are being reduced to poverty. The newly-elected administration blames Germany for reportedly preventing the European Central Bank, in effect all euro currency bloc member countries’ central bank, from opening the money tap.

Germany, in turn, with veteran finance minister Wolfgang Schauble leading the charge, insists that Greece is undermining the confidence of its European partners by delaying to put in order its finances.

To do this, Greece must agree to continue implementing austerity and reform measures such as further privatisations of state assets, less welfare spending and less labour rights. Symbolically, Germany sees itself as the strict but benevolent parent while Greece sees itself as a rebel with a cause. Incidentally, Germany might itself be breaking the rules for exporting too much.      

In this battle, as Berlin-based Greek blogger “Techiechan” observes, the Alexis Tsipras administration with the aid of Finance Minister Yanis Varoufakis so far succeeded on two points: they have introduced a slither of transparency to the notoriously opaque European way of doing political business and have exposed to an international public the dominance of the German government in European affairs, as an account of a meeting of top euro area officials by US economist James Galbraith proves.

Stronger backlash

But this, in turn, has led to a stronger backlash against Greece with most Germans for the first time wanting it to leave the euro area. Surprisingly, on the extremely sensitive subject of Nazi-era war reparations, which Schauble dismisses as a ploy, certain German politicians have broken rank and want to come to an agreement with Greece. A German couple, Ludwig Zacaro and Nina Lahge recently each donated 875 euro to a small town in Greece: they calculated it was their share of the supposed 70 billion euro of reparations collectively owed by 80 million Germans.

Symbolically, Germany sees itself as the strict but benevolent parent while Greece sees itself as a rebel with a cause.

The Greek government is less keen on making as concrete calculations when it comes to solving its side of the crisis and Tsipras’s brave rhetoric of refusing to succumb to what he calls “blackmail” is not enough.

Unless the government finds ways around the ECB’s “nein” stance towards lending to Greece’s main banks and at the same time miraculously kick-starts income collection (taxes and social security contributions from those who so far have were not paying, from so-called oligarchs to professional and regional pressure groups), it might run out of money in the coming weeks. Greece might not leave the euro zone but default inside it, given its obligations, foreign and domestic.

Is there a way out? On the level of unconventional but common sense solutions to get Greece’s economy going, Richard Werner, a German academic with immense private-sector experience who has lived through Japan’s withering and South East Asia’s blooming, has proposed what he calls “Enhanced Debt Management”.

There is a hitch, though. It would involve national governments and banks bypassing the ECB’s undemocratic, supra-national stranglehold and so the ECB wants nothing to hear of it. Sadly, it appears that Greece’s new top finance ministers are willing to comply with the ECB’s dominance, as an editorial they co-authored for the Financial Times illustrates

Paraphrasing Lenin, someone whose work both Germany’s Chancellor Angela Merkel and Greece’s Tsipras most probably read in their youth, what is to be done with the ECB? Can Europe’s leaders come together for the interests of their electorates and not those of their central bankers? That is a good question Merkel and Tsipras just might dare discuss when they officially meet.

Menelaos Tzafalias is a freelance journalist based in Athens, Greece. He has worked as an associate producer on the documentary “Palikari: Louis Tikas and the Ludlow Massacre”, a story about migrants and labour relations in early 20th century America.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.


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