Humiliation of Greece underlines the dying dream of European union

Kevin Rafferty says the harsh austerity package being forced on Greece only erodes the European ideal

PUBLISHED : Tuesday, 14 July, 2015, 5:43pm
UPDATED : Tuesday, 14 July, 2015, 5:43pm

Visiting Europe these past few days from euro-zone to non-euro-zone countries, talking to key players in The Establishment and ordinary people, I am reminded of lemmings running off the cliff in slow motion.

The worry is not merely Greece and the never-ending soap opera called "Grexit", but the slow suicide of the European ideal being committed by the tribes of small-minded politicians who claim to be Europe's leaders. The sad, savage irony is that the immediate drama is being played out over Greece, the cradle of modern democracy, in the tarnished name of democracy.

Who would have imagined a Greek tragedy of such tragic proportions with minor players in major roles?

Respected economists, including Nobel laureates, sympathised with the pain that Greece has endured since becoming effectively insolvent in 2010, including a failing economy, unemployment of 26 per cent, youth unemployment of 50 per cent and banks running out of cash.

Austerity is not the answer, the Nobel economists pleaded. Victory in January's elections by the radical Syriza party headed by the young photogenic Alexis Tsipras allowed the Greek government to claim that the people had joined the eminent protests against continued austerity.

It was surely hubris that deluded the inexperienced Greek leaders to try to strut across the European stage as if victory made them owners. Especially if Yanis Varoufakis, the cocky finance minister then, was correct and Germany was out to punish and break Greece, it would have been wiser to make allies to mitigate the damage. Instead, Varoufakis' arrogance antagonised other Europeans.

Even after cuts, pensions in Greece are €833 (HK$7,200) a month on average, higher than the average working wage in Lithuania. In the 19-member euro zone with almost 340 million people, why should the verdict of Greece's democracy with a mere 11 million people count as superior to the views of the rest?

In an economically perceptive but politically naïve article in The Guardian, Varoufakis claims that Germany's finance minister Wolfgang Schauble had decided in 2012 that "Grexit's costs were a worthwhile 'investment' as a way of disciplining France et al". At that time, Varoufakis claims, the idea "scare[d] the living daylights out of almost everyone else". But by the time Syriza won power, he continues, "a large majority within the euro group - under the tutelage of Schauble - had adopted Grexit either as their preferred outcome or weapon of choice against our government".

Why didn't Varoufakis and Tsipras box cleverer and try to win friends, pointing out that neither austerity nor Grexit would work for Greece or Europe, rather than slugging it out with Schauble? They could have made Schauble squirm with history lessons of austerity that the victorious allies imposed on Germany in 1919 - leading to the rise of Hitler - and generous debt write-offs in 1953 - leading to the rise of prosperous modern Germany. The most commonly used word, both in conversations with the great and the good of Europe, and in the angry heated exchanges in the 17-hour marathon summit was "trust", lack of trust as far as Greece is concerned.

The bizarre week which saw Tsipras successfully urge his compatriots to vote "no" to the harsh austerity terms proposed for Greece, then capitulate and propose accepting even tougher terms, did nothing to improve the trust.

Euro-zone leaders demanded new concessions and more austerity, effectively that Athens surrender its fiscal sovereignty to the EU. One senior EU official admitted that the treatment amounted to "extensive mental waterboarding". Der Spiegel, the German news magazine, worried that the German-inspired measures amounted to a "deliberate humiliation" of Greece.

A group called #ThisIsACoup quickly attracted more than 100,000 followers on Twitter condemning the treatment of Greece.

Monday's summit "deal" is in fact not a deal, but an agreement that buys time to negotiate a deal. Greece's parliament has to pass a package - increasing taxes, including value-added tax, cutting pensions and amending labour laws - by Wednesday, for which it will get bridge financing and a chance to negotiate a bailout worth up to €86 billion, but without debt write-offs, if the German and Finnish parliaments agree.

What does it matter to the world? A complete collapse of Greece, in spite of the twitchiness of financial markets, would have a small immediate impact on the rest of the world. Greece's gross domestic product last year was US$238 billion, a fraction of world GDP.

But a Grexit - for which massive task, Varoufakis admitted, Greece is unprepared - would have contagious destabilising effects politically and economically. Russia's Vladimir Putin could have a field day tempting Athens. Irish economist David McWilliam suggested that going back to the drachma or a new drachma is no solution, and Greece should adopt the Chinese renminbi as its new currency - there's a mischievous thought.

This is not about Greece alone but about the brave experiments called the euro and the dream of European unity. In effect, Schauble and his henchmen have reduced the euro to a single currency run in the interests of Germany. Columnist Wolfgang Munchau claims the currency is "held together by the threat of absolute destitution for those who challenge the prevailing order". The weekend summit only revealed the brutal truth.

The other brutal truth of the crisis is that the dream of Europe is on life support, tended by the tangled Eurocracy. What is the legitimacy of European Commission president Jean-Claude Juncker?

Our world is becoming increasingly global, and the air breathed in London, Paris, Brussels, Berlin, Hong Kong or Beijing is affected by decisions and actions taken worlds away. But politicians and the media, especially in Europe, bury their heads in tribal affairs. The main headlines in London on Tuesday concerned finance minister George Osborne's determination not to pay £850 million (HK$10 billion) towards emergency loans to Greece.

If Europe 2015 comes down to "my democracy" versus "your democracy", where Schauble and Angela Merkel hold determined sway, the post-war hopes of Jean Monnet and Robert Schuman are in deep trouble - and so are we all.

Kevin Rafferty is a political commentator