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Wolfgang Streeck: The Greek crisis—trapped in the Eurozone

Miri Davidson10 July 2015

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Wolfgang Streeck, author of Buying Time: The Delayed Crisis of Democratic Capitalism, outlines how the Greek crisis has revealed "a deep and lasting split in Europe" as well as the contradictions inherent to a debt-ridden global economy. Originally published in Der Spiegel, 8 July 2015. Translated by David Fernbach.

There is progress in Europe after all. When the then Greek Prime Minister Georgios Papandreou wanted to hold a referendum in 2011 on the austerity demands of his European colleagues, they summarily dismissed him.

As his successor, Brussels and Berlin appointed a certain Loukas Papademos, an agent of international finance who in the early 2000s, as head of the Greek central bank, had helped to make his country ready for Europe with the help of Goldman Sachs. There was no repeat this time round – precisely thanks to the remnants of national democracy that German Europhiles want to suspend in favour of a future "European democracy".

No one can say in detail how things will go after the overwhelming "no" from the Greek people. The situation is too volatile, too much is happening at the same time, the causal connections are weak and untested, predictions are still only guessing games. What we do know, however, is that the whole unspeakable campaign of intimidation was unsuccessful, not even the widely distributed advice of the unanimous German press, which has always known better what is good for Greece than the elected Greek government itself. What has also been shown is that in southern Europe referendums as well as elections can be won with posters of Merkel and Schäuble.

The self-proclaimed "Europeans" in the secure north underestimated the despair of the Greeks after the collapse of the frivolous experiment of their membership of the currency union, as well as their anger at being made the object of secret Brussels negotiations. Whether the Brussels professionals will learn something from their defeat at the hands of the Athenian amateurs is something we may well doubt. They will rather try to make up for their failure to remove the Greek government beforehand.

It’s getting really expensive

In the short term, however, the hope in European capitals that they can carry on business as usual with the tried and tested Greek representatives of the "European idea", such as Samaras, Venizelos, Papandreou III, Karamanlis II and co, has been shattered after the referendum. As we say in Germany, it’s getting really expensive. What has been offered in the last five years to the Greeks chained to the European gold standard has proved too little to live on and too much to die on – and the Greeks, not initiated in neoclassical economics, cannot understand why the road to maintaining or even improving their standard of living should lead by way of a further reduction for the foreseeable future.

Since, according to the German press, people like Tsipras are capable of anything, including a financial suicide attempt in the form of a unilaterally declared insolvency, there will be crusts to swallow in the agreement, and debts without end to repay – perhaps with an extension "to the Greek calends". And in comparison with the programme for stability and growth that will be needed as reparations after the defeat in the war of nerves with Syriza, the few and actually fictitious billions from Juncker will very soon prove to be peanuts.

Syriza, still the only one of the Greek parties untouched by the country’s endemic political corruption, will now inevitably want more than the minimal payment required to maintain a Brussels-dependent pyramid of clientelism, to be negotiated every six months. We must hope that it does not renege on this, and recognizes talk of the currency union as the birth of a  "European idea" with "European solidarity" for what it is: just talk. If Syriza maintains its demands, then a productive process of learning can begin on both sides: "Europe", and Germany in particular, may come to understand that a hard currency union with democratically organized soft currency countries will only be possible eventually with the establishment of a transfer union, as the neoliberal opponents of the Euro always warned us; and it will become clear to Greece that what is obtainable in Brussels and Berlin in coming decades – and that means in practice for ever – remains far behind what is needed simply to restore living standards as they were before the crisis.

"Greek tragedy"

After being strengthened in office by the referendum, the Syriza government faces painful experiences. The Brussels professional team clearly know that all those who, like Syriza, want to remain in the European currency union have to play by the neocapitalist rules in force. These are determined by governments afraid of their voters, particularly those at the present time who support the rising sovereigntyist parties of the right. To expect "solidarity" beyond national borders from societies that find it ever harder to practise solidarity within these borders – fiscally consolidated societies of high productivity, marked by an ever sharpening rat race for money and "career" and with a growing underclass filtered out by competition – is, as Talleyrand put it, worse than a sin, a mistake. And the same holds for the idea, and there is such a thing, that socialism in Greece could be based on redistributing the living standard of the West European middle class by way of non-repayable capitalist credits – especially as this standard, where it did exist, is ever more fragile.

Things are getting tight for Germany and its government too. If the Greeks play their reshuffled cards cleverly, then it will no longer be possible to conceal the costs of the currency union from German taxpayers. That the latter will be prepared to go on meeting the charge for the German export industry’s market access in the Eurozone and the price for the ridiculously low foreign value of a currency valid in Germany is anything but certain; basically, not everyone works for Daimler. By coincidence, the day of the Greek referendum saw the appearance for the first time on the German political horizon of a potentially competitive right-populist party. The point when the coalition will have to account to it and to German citizens for what their "European idea" has already cost and will go on costing, could become the moment of opportunity for a party that might reduce the CDU/CSU to the electoral level of the SPD. "Populism", as a political perspective that sees the world as divided between self-regarding elites and the masses whom they lead up the garden path, has the best prospects of seeming plausible to electors in the European Union.

In German politics over the last few months, Die Linke and the Greens have blamed Merkel, and the right have blamed Tsipras, for lacking "European spirit". This is certainly not accidental given that the real problem is the construction of the currency union and will remain so, like a gold standard refusing Greece and other Mediterranean countries the possibility of supporting economic adaptation by the devaluation of their currency. In the face of the "house of bondage" (Max Weber) erected by the currency union and the complex of interests wrapped up in it, any "idea" must repeatedly "disgrace itself" (Karl Marx, The Holy Family). If either Sigmar Gabriel or Walter Steinmeier had been chancellor they would have acted no differently from Merkel or Schäuble, no matter how until shortly before the Greek referendum they restrained themselves from publicly admitting this out of respect for a Green-Red clientele partly in thrall to economically illiterate Habermas-type Euro-rhetoric. Something rather similar holds for Tsipras and Varoufakis, despite their (still?) not belonging to the traditional clientelist establishment of their country maintained by "Europe". To that extent it in no way signals a lack of literary culture if people constantly talk of a "Greek tragedy".

Europe’s deep and enduring division

That Syriza has won the vote at least means that the structural problems of the currency union will not be clothed yet again in "European" rhetoric. As long as the currency union survives, then even the present gap between rich and poor member states, let alone any hoped-for economic convergence, will only be preserved by ever repeated "compensation", "support", "aid" and other payments. But in the real world such funds are only provided in exchange for controls, deep interventions from above into the state sovereignty of the recipient countries. It is predictable therefore that these will view the money made available to them as insufficient and the counterpart in "governance" that the north demands as excessive, while the subscribing countries will feel overburdened in material terms and politically over-advantaged. The internal politics of the currency union will be lastingly polarized in national terms along this line of division, irrespective of whether and how the Greek debts are written off in the coming weeks or rescheduled – and this not only because the Italian and Spanish debts will then unavoidably be also open to discussion (in Spain after a then certain electoral victory of Podemos), but especially in view of the anticipated further polarization of income distribution within the currency union.

Whatever unpredictable events may occur in the next few weeks, beneath the turbulent surface of day-to-day politics the currency union, after existing for a decade and a half, already appears as a field of rubble on a scale comparable only with the ruins of the mythical Atlantis.

What we see here is, first of all, a deep and lasting split in Europe, in foreign policy terms between north and south and between members and non-members of the currency union and the EU, and domestically between the old governing parties increasingly abandoned by their electors and the new "populists" of both left and right, but chiefly of the right.

Secondly, a decades-long rock-hard blockade of the much-trumpeted road to an "ever closer union of the peoples of Europe": no European government will venture in the foreseeable future to commend to its electors a further transfer of sovereignty to Messrs Juncker and Schulz.

And thirdly, we can predict a collapse of Germany’s post-war foreign policy, which as well known has consisted in avoiding any appearance of Germany even dreaming to claim a hegemonic position in Europe. As a result of a currency union that it did not want, Germany is seen today as the disciplinarian tyrant of the European peoples. The moralization of macroeconomics that has come particularly from the USA – readily taken up in the accusations against the chancellor from the German left – has convinced public opinion in all the European countries to which it is applied that the crisis in Greece and elsewhere is not part of the global crisis of a decaying financial capitalism, but rather arises from ignorance or sadism, from a Swabian housewife mentality, or from the imperialist claim to dominance of the Germans and their government – and usually all these things at once. This is the result of German policy with its sacralisation of the currency union as an emanation of the "European idea".

Perhaps the crisis has no solution for either Greece or Europe – not even any longer in the form of a demolition of the unholy currency union. Perhaps what we are experiencing today is nothing more than the European preview of an impending global debt and growth crisis – from Detroit to Puerto Rico, where "austerity" is being enforced under the supervision of the United States, via Brazil and Russia, through to China with its gigantic debt mountain that has been further swollen by a deep recession. Debt everywhere, and possibly well beyond such shrinking growth potential as still remains. Perhaps Greece is simply one of the ever more numerous places on the margins of empire where the house of cards of empty promises on which our living standards are built, expressed in ever new "financial innovations", is starting to collapse?

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