Bryan MacDonald is an Irish writer and commentator focusing on Russia and its hinterlands and international geo-politics. Follow him on Facebook
When you continuously kick a can down the road, one day the receptacle is so battered that it can be propelled no more. That day has finally arrived for the EU and Greece. Whatever the outcome of today’s landmark vote, Europe will never be the same again.
If the Greek people say yes, the EU’s peripheral states will be
consigned to German domination. This is not necessarily always a
bad thing. There is no doubt that many of the world’s more
unstable nations could do with becoming a little more German.
Nevertheless, while being economically strapped to Berlin is
mostly beneficial for well-run countries like the Netherlands or
Austria, it’s a complete disaster for the likes of Greece or
Portugal.
Southern Europe, from Lisbon to Athens, via Belgrade and Rome,
prospered in the post-war decades. The reason was pretty prosaic.
These nations, which could devalue their currencies to their
hearts content, were part of the world’s largest market-place,
Europe.
After Italy first joined the then EEC (initially the Coal and
Steel Community), favorable access to German and French markets
allowed the country to thrive like never before. Inspired by
Rome, Portugal, Greece and Spain demanded entry after jettisoning
fascist and military regimes. So too, did other non-core European
countries like Ireland and Finland. Even the British, who had
originally dismissed the alliance as a club for
“German-speaking Catholics,” had signed up by 1973.
At the time of the first tentative negotiations, all three main
players (France, Italy and Germany) were indeed led by
German-Speaking Catholics. Robert Schuman of France was
originally a Luxemburger, Italy’s Alcide De Gasperi was born into
the then Austrian-controlled Tyrol and West Germany’s Konrad
Adenauer hailed from a staunchly Catholic family in Cologne. This
alienated the largely Protestant British, led by Foreign
Secretary Ernest Bevin – a Baptist lay preacher – who according
to the historian John Charmley had difficulties with reading and
writing in English.
The birth of the euro
As the EEC became the European Union, the euro began to take
shape. The attraction of the single-currency to peripheral
European states was obvious. It offered cheap, easy credit and
guaranteed exchange rates to countries that had previously
experienced cripplingly high-borrowing costs and serial currency
devaluations.
Take Ireland as a case in point, While Dublin used its
independent Punt, I distinctly remember interest rates of between
15-20% making life very difficult for businesses and mortgage
holders. The sovereign also frequently found it impossible to
raise cash on international markets without paying extortionate
rates. As soon as Ireland was locked into the eurozone, interest
rates plunged to negligible percentiles and, awash with cheap
credit, a frenzied (ultimately bananas) construction boom seized
the nation.
Just for some context, so crazy were things by 2005 that my
friend Ronan ditched his comfortable job as a History and French
teacher (salary about €45,000 annually) to work as a block-layer.
For a few years, he earned between €400-600 a DAY as a brickie.
After the 2009 Great Financial Crash, laden down with unplayable
debt, he ‘did a runner’ to France where he now, ironically, works
as a school ‘handyman’ for €300 a week and gives English lessons
on the side.
Greece (and Ireland and others too) essentially emulated Ronan on
a far grander scale. With cheap money sloshing around, they
allowed the pillars of their economies to rot and climbed aboard
the speculation train like ‘90s ravers on MDMA. Athen’s wealth
had been based on Greek control of much of global shipping and a
tourism industry which was the envy of the world. The euro era
saw productive capital from these sectors diverted to gambling on
property. They all might as well have placed all their money on
the favorite in the 4.30 at The Curragh. If the horse lost, they
could have at least have gotten some satisfaction out of watching
the race.
A misguided genius?
Most analysts ‘credit’ Francois Mitterand with ensuring the birth
of the euro by forcing Germany to agree to the currency in
exchange for French acquiescence to Germany’s reunification. This
is not the full story. The ‘evil genius’ behind the euro was
actually a Canadian called Robert Mundell. Indeed, the root of Greece’s
current predicament lies in the politics of Margaret Thatcher and
Ronald Reagan, not the Paris-Berlin horse trading of 25 years
ago.
Professor Mundell, who, despite now being 82, still teaches in
New York and Hong Kong, laid the groundwork for the euro. He also
helped found the supply-side economics movement beloved of
neoliberals. According to the journalist Greg Palast, Mundell
believed that “the euro would really do its work when crises
hit.”
Mundell apparently boasted: “It puts monetary policy out of
the reach of politicians, (and) without fiscal policy, the only
way nations can keep jobs is by the competitive reduction of
rules on business.” Palast adds that, “for him
(Mundell), the euro wasn’t about turning Europe into a powerful,
unified economic unit. It was about Reagan and Thatcher.”
Hence, when crises arise, economically disarmed nations have
little to do but wipe away government regulations wholesale,
privatize state industries en masse, slash taxes and send the
celebrated European welfare state down the drain.
Of course the great European project is also profoundly
undemocratic. Its execution is designed to force the electorate
into a position to which they did not consent, and from which the
only escape is ‘more Europe.’
Merkel’s failure
Angela Merkel knows this too. For this reason, she has booted the
bucket down the Autobahn for years. The preacher’s daughters only
concern during the years of this crisis has been to pray that
neither the EU nor the euro will break up on her watch. Merkel is
not a pro-Brussels ideologue. In fact, she’s a consensus
politician who rules by opinion polls, rarely taking strong
positions. Merkel’s surveys of the German people tell her that
bailing out Greece is not a popular option. So Angela Merkel is
opposed to extending a lifeline to Athens. If the Bild tabloid
suddenly changed tack and supported the idea of debt-relief for
Greece, Merkel most probably would also do a U-turn.
Since the first signs of a European fiscal crisis, Merkel has
espoused a doctrine of austerity for the entire periphery, with
no significant debt relief. Of course, neither the Chancellor nor
her Eurocrat devotees in Brussels have ever explained what will
happen when everybody completes their austerity program. If
everyone becomes ‘more competitive’ then how do any of the fringe
EU states gain an advantage?
Naturally, Merkel’s non-confrontational style of rule has
more-or-less led to today’s make or break vote. As any amateur
psychologist could explain, long-fingering traumatic issues
generally lead to them all coming to a head at the same time.
Even Hamburg’s Der Spiegel, recognized as a strongly
pro-neoliberal and Atlanticist organ, has accepted that Greece
needs German help. Once described as “Scheißblatt” (shit paper)
by the leftist creator of ‘OstPolitik’ (a rapprochement between
Bonn, later Berlin, and Moscow), Willy Brandt, Der Spiegel has
openly savaged Merkel this week for her appalling leadership.
“It has long been clear that Greece is a special case in the
context of the euro crisis. It is a country in which neither the
taxation system nor the land registry system works, a country
that is so deeply in debt that no reasonable economist still
believes that it can ever repay what it owes,” the magazine
declared.
“Merkel knew all of this. Nevertheless, she tried to fix the
problem with recipes she had used in German domestic politics:
delaying, hiding and allowing things to remain vague… Merkel
hopes that the Greeks will vote against Tsipras and in favor of
their creditors’ austerity proposals on Sunday. If that happens,
the Greek prime minister will hardly be able to remain in office.
But even so, Greece will remain a bankrupt country and would be
faced with forming a new government in the midst of chaos. The
Greek crisis required leadership and a plan, but Merkel was
unwilling to provide either. Although she likes power, when push
comes to shove, she doesn’t know what to do with it. And now she
faces the wreckage of her European policy,” Der Spiegel
continued in an eye-opening read.
The arrogance of the anointed
Last night, Martin Schulz, the German President of the European
Parliament declared that Greece “risks a collapse of the
medical system, power black-outs, and an import blockade” if
voters reject creditor demands in the referendum.
“Without new money, salaries won’t be paid, the health system
will stop functioning, the power network and public transport
will break down, and they won’t be able to import vital goods
because nobody can pay,” he said.
Schulz, an archetypal Eurocrat, has never held high office in
Germany. In fact, his biggest job in his homeland was as mayor of
Würselen, a town near the Dutch and Belgian borders in Nord
Rhein-Westfalen. Würselen has a population of 37,685.
Nevertheless, this domestic non-entity has somehow managed to
become the voice of Europe, in much the same way as previously
obscure apparatchiks often suddenly became important in the old
USSR, baffling western intelligence services. Schulz’s
high-profile and huge power exposes the democratic deficit at the
heart of the EU.
Schulz, who has not been directly approved by the European
people, earlier called for the democratically elected Syriza
government of Alex Tsipras to be replaced by similarly unelected
“technocrats” until “stability is restored.”
His comments were a useful insight into the mentality that stalks
the corridors of Brussels. A place where an elite with no mandate
from the ballot box seem to believe they can do as they please.
However, Schulz is right about one thing. If the Greeks vote ‘No’
today, the countries’ financial system and public services will
probably collapse in the short-term. However, if they vote ‘Yes,’
Greeks are merely prolonging a slow march to the abyss. Without
debt relief or a default and reboot, Greece has no hope of a
brighter future. The choice today is simply whether Greeks want
their suffering to be slow and brutal or fast and cataclysmic.
Europe in 2015, Schuman, Adenauer and De Gasperi would be
appalled.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.