Greeks and Germans
It will be a tragedy if Greece’s debt crisis leads not only to economic and social upheaval but also to the loss of important partners and friends abroad. Because all Europe lives with a sense of insecurity – where each nation sees the gains of the past 60 years threatened by a global economic crisis with unpredictable consequences – it is very easy for a wave of populism to break out. People are scared and their fear is expressed by rage and by the demand for guarantees for the future and for explanations as to what went wrong. The outbreak of rage expressed by many Germans toward Greeks (which is encouraged by some German news media, leading to a similar reaction by some small-minded politicians and media in Greece) may be explained by current circumstances but this does not make it any less dangerous: It can undermine a friendship of many decades, lead political and social life in both countries to unpredictable dangers and tear apart any sense of European solidarity and, consequently, undermine the future of Europe. Greece today is forced to apologize for being a credit junkie and for the perennial inability of its political elite to change course so that the country could have avoided the threat of bankruptcy. The government is forced to keep borrowing but it must also take measures that will finally place the economy on a more viable footing and make the public administration more effective. Both of these challenges demand the greatest possible consensus among our citizens and parties as well as the support of our partners. But the sullen indecision of many European governments (which, on the one hand, want to punish us but, on the other, don’t want to see the common currency going down the drain) leads directly to the most damaging result: the even more rabid attack of the most predatory elements of the financial credit system against Greece and the euro. As long as Greece is in danger, the price of its borrowing will keep rising, but what’s worse is that ever greater amounts are being bet on the possibility of Greece going bankrupt. The question as to whether the government’s measures are enough to deal with the crisis becomes meaningless when too many people have a stake in the country’s demise. A report in The New York Times last Thursday was most revealing; it described the vicious cycle in which the rise in insurance against the possibility of Greece’s default pushes up the interest on Greek bonds, and then these higher premiums appear to confirm the need for higher insurance and so on. According to the newspaper, the cost of insuring $10 million in Greek bonds went up from $282,000 in early January to $400,000 in February. The amount invested in such swaps came to $85 billion last month, from $38 billion a year earlier. The longer the Greek government delays winning the support of our partners, the worse the situation becomes. This is made clear by the fact that many of the banks that lend us money are rushing to buy security. At this point, French banks have Greek bonds worth $75.4 billion, Swiss ones have $64 billion and German ones $43.2 billion. And this brings us to the simplistic argument of many Germans: We have contributed 200 billion euros to Europe since Greece joined the then European Economic Community – during which time Greece got 100 billion euros and now wants more, they argue. Indeed, German money did help Greece develop, as did German companies and the close links of friendship and cooperation that developed over the past decades. However, if we want to look at things solely from the economic side and without touching on the loaded issue of the unpaid «loan» that Germany extorted from Greece when it occupied the country during World War II, let’s consider that in the past few years Greece has imported more than 6 billion euros’ worth of goods from Germany annually. In 29 years of partnership in the EU, this implies that about 175 billion euros of Greek funds went to Germany. And if we borrowed in order to make those purchases, a large part of the money was loaned to us by German banks, which have been making a killing off their share of the interest. It’s time that politicians in both countries got serious. They must spell out to their people the truth of the matter and the dangers of German unwillingness to support Greece politically and Greece’s foot-dragging in taking measures that will discredit speculators’ profitable pessimism.