Greece’s German-built money hall reveals unity, divide over euro

Greece’s German-built money hall reveals unity, divide over euro

A reminder of why the Greeks and Germans are lashed together in a common currency called the euro sits in a 19th century Athens mansion built by a German for a German.

The Greek capital’s Numismatic Museum traces the history of money from antiquity when Greece minted coins to today’s euro. Amid the exhibits is a 100 billion-drachma note from 1944. The bill was issued in the wake of the Nazi occupation when war and famine drove inflation to as high as 13,800 percent a month.

The fear of hyperinflation — in Germany in the 1920s ahead of the rise of the Nazis and in Greece two decades later — underpins the creation of the euro that both nations share. It’s also one of the elements in their tangled history that divides and unites them.

“The relationship is characterized by historical legacies, going back before the Nazi occupation,” said Jens Bastian, a German economist who has lived in Greece for 16 years. “But the contemporary relationship is also characterized by a fundamental misreading, misconceptions of the other country.”

Greek Prime Minister Alexis Tsipras makes his first visit to German Chancellor Angela Merkel in Berlin on Monday in an effort to win her support for additional money from Greece’s bailout fund. Without a fresh infusion, the Greek government could run out of money as soon as the end of this month.

The two nations have traded barbs since Tsipras came to power in January over how Greece’s austerity program can continue with German funding and whether Germany should pay more for the Nazi occupation of Greece during World War II. German Finance Minister Wolfgang Schaeuble and his Greek counterpart Yanis Varoufakis have verbally sparred with each other over aiding Greece, leading a majority of Germans for the first time to say in a poll this month that they want Greece to leave the euro.

Frayed relations

Merkel and Tsipras sought to bring their frayed relations back from the brink at a European Union summit in Brussels at the end of last week and Tsipras said in an interview published over the weekend in Greek newspaper Kathimerini that he wants to improve his country’s relations with Germany.

Optimism that Greece may reach an agreement with its creditors that will unlock further aid for the country to keep it afloat helped the euro rally in New York late Friday. The common currency gained 3.1 percent last week, its biggest weekly increase since October 2011. Greek assets also recovered from steep falls this month. The Athens Stock Exchange index rose 2.9 percent on Friday while yields on three-year bonds fell more than 200 basis points to 21.4 percent.

Since his election as the first leader who didn’t belong to one of the two main political parties that ran Greece in the 40 years after democracy was restored, Tsipras has stoked the debate over reparations, which has won him support at home. His first official action after he became prime minister was to pay tribute to victims of the Nazis. His coalition partner, the Independent Greeks, founded their party in the town of Distomo, where 218 Greek villagers were killed by Nazis in 1944.

“The generation of the occupation and national resistance is still alive,” Tsipras said in Parliament on March 10 during the debate to set up a committee for reparations.

Shifting memories

For most Germans, that historical memory is an unknown, overshadowed by more recent memories of the tens of thousands of Greeks who moved to Germany as guest workers — “Gastarbeiter” in German — to find work, and in the millions of German vacationers who are the backbone of Greece’s tourism industry.

“The Greek memory goes back to 1941 whereas the German memory starts with the Gastarbeiter in the 1960s, not in the 40s,” said Christos Katsioulis, 40, who grew up in Germany with a German mother and a Greek father who had fled the 1967 military dictatorship. “The only thing mentioned in my German schoolbook about the war in Greece was the fight over Crete. That was all.”

Invaded first by Benito Mussolini’s Italy and then by the Nazis, Greece ranks with Germany among a handful of countries that have experienced the 20th century’s most severe hyperinflation episodes in Europe, according to academics.

Hungriest country

More than 500,000 Greeks, or 7 percent of the population, died between October 1940 and October 1944, 260,000 of them from hunger and malnutrition. A Time magazine news report in 1942 labeled Greece “the hungriest country,” with bread costing $15 a loaf. Some 50,000 Jews from Thessaloniki perished in Nazi death camps.

By 1946, the country had plunged into civil war with communists backed by Yugoslavia, Bulgaria and Albania fighting government forces supported by the US and Britain. Many Greek Communist supporters sought refuge afterward in the Soviet bloc and the party remained outlawed until 1974, when the military dictatorship fell and democracy returned.

That history — and a cycle of drachma devaluations and inflation as recently as the 1980s that eroded Greeks’ savings – – meant that Greeks were among the most ardent supporters of the newly-created euro currency.

Austerity recipe

Germany’s response to hyperinflation has been a strict adherence to budgetary discipline and that has been reflected in the recipe meted out to Greece during two previous bailouts to stave off the financial collapse of a member of the euro.

The accompanying recession has shaved a quarter off output and put more than a million Greeks out of work and is considered the worst economic downturn since WWII. Tsipras has tapped into the growing dissatisfaction with an anti-austerity message and defying Merkel, taking his party from about 5 percent of the vote in 2009 to power now.

Signs of the long relationship between the two nations are visible on the streets of the Greek capital. Downtown Athens is dominated by a parliament building that began life as a royal palace designed by a Bavarian for Greece’s royal family — originally from Germany. After winning freedom from 400 years of Ottoman rule, Greece’s protectors in 1832 provided the newly independent state with a Bavarian prince who became King Otto.

Nazi symbols

The Numismatic Museum was once the home of Heinrich Schliemann, the German archaeologist who excavated Troy. The ancient swastika symbol later appropriated by the Nazis adorns the gate, the painted ceilings and the mosaic floors of the building.

Greek politicians from the left and right have pointed to how austerity and deprivation led to the rise of the Nazis and urged Germany to ease its insistence on bailout terms that drove up unemployment and slashed incomes to avoid “a Weimar Republic.” The Jan. 25 elections that brought Tsipras to power also gave third place to a party called Golden Dawn, which drew support with its anti-immigrant stance and stiff-armed Nazi salutes.

Germany’s position is crucial because the country is the biggest contributor to Greece’s 240 billion-euro ($253 billion) twin bailouts and the chief proponent of budget cuts and reforms in return for aid. Merkel is willing to go a long way to accommodate Tsipras, provided he plays by the rules, according to a person familiar with her thinking.

Tsipras and Merkel share many personal similarities such as being able to adapt quickly to changing political realities, said Katsioulis, who is the director of the Friedrich Ebert Stiftung in Athens. But Tsipras needs to bend too, he said.

“In a European framework, he positions Greece on the one end and Germany on the other,” he said. “When you want to change Europe, you need Germany. You can’t fight them and put them in a corner — then they’ll fight back.” [Bloomberg]

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.