American expatriate poet T. S. Eliot wrote that “It is the final perfection, the consummation of an American, to become not, an Englishman, but a European—something which no born European, no person of any European nationality, can become.”
The European Union set out to disprove that idea, that no one rooted in a country of Europe can become broadly European. But recent events seem to suggest that Eliot was right.
The Europeans have, at least on the surface, been pretty patient with Greece. According to Reuters, 6/28/15,
Greece … owes its official lenders 242.8 billion euros ($271 billion), according to a Reuters calculation based on official data, with Germany by far the largest creditor.
That figure includes loans made under two bailouts from European governments and the IMF since 2010 — worth a nominal 220 billion euros so far, of which some has been repaid — as well as Greek government bonds held by the European Central Bank and national central banks in the euro zone.
Private investors hold 38.7 billion euros of Greek government bonds following a major write-down and debt swap in 2012 that reduced the Greek debt stock by 107 billion euros and the value of private holdings by an estimated 75 percent….
Germany’s exposure for the two bailouts totals 57.23 billion euros, France’s is 42.98 billion, Italy’s is 37.76 billion and Spain’s 25.1 billion….
But now the Europeans have been pretty rough in imposing their requirements on a people who cannot realistically comply. Jacob Soll, “Germany’s Destructive Anger, New York Times, 7/15/15, the current crisis brings out the deep-seated antagonism between the Germans and the Greeks, both of whom feel taken advantage of; he concludes:
Here lies a major cultural disconnect, and also a risk for the Germans. For it seems that their sense of victimization has made them lose their cool, both in negotiations and in their economic assessments. If the Germans are going to lead Europe, they can’t do it as victims.
I hate to see people with their backs against the wall, especially people with such a long and glorious history as the Greeks. As usual, it is ordinary individuals who are bearing the brunt of incompetent governments, cultural differences, and international financial structures.
The Greeks have endured more than their share of occupations: by the Roman Empire, the Byzantine empire, and the Ottoman Empire; the larger part of today’s Greece finally gained independence in 1830. Closer to our situation today, Nazi Germany and its allies occupied Greece during World War II. According to Wikipedia,
The occupation brought about terrible hardships for the Greek civilian population. Over 100,000 civilians died of starvation during the winter of 1941–1942, tens of thousands more died because of reprisals by Nazis and collaborators, the country’s economy was ruined and the great majority of Greek Jews were deported and murdered in Nazi concentration camps….
The German occupiers committed series of atrocities, mass executions, wholesale slaughter of civilians and destruction of towns and villages in Greece….
….hundreds of villages were systematically torched and almost 1,000,000 Greeks left homeless. In total, the Germans executed some 21,000 Greeks, the Bulgarians 40,000 and the Italians 9,000….
Greece also endured a civil war from 1946-49 (one of the first proxy wars of the Cold War era) and a military regime from 1967-74. This is all recent history for many Greeks.
The European Union is a good concept, and it has made another war between the major European powers unthinkable for now, but if the founders thought they would obliterate history and the living memory of people who lived through it, they were wrong. And when the Germans are leading the charge for Greek austerity, of course there is resistance, just as there was in World War II.
People have been comparing the situations of Greece, which can’t restructure its debts and economy on its own terms as long as it uses the euro, and Argentina, which turned its economy around in recent years. The Argentine ambassador points out that Argentina restructured its debts in 2005 and 2010, and that
…since 2003, Argentina’s economy grew at an annual average rate of 5.7 percent, the size of its middle class doubled, and the ratio of debt to gross domestic product declined from 166 percent in 2002 to 40 percent today.
If there is one lesson from Argentina’s experience, it is that debt sustainability and economic growth go hand in hand. As former President Néstor Kirchner famously stated, “The dead do not pay their debts.”
If Greece as an economy dies, its creditors will be left holding the bag. Or else, they will have to invade and help themselves to the material assets they want. The British Museum already has the marble sculptures form the Parthenon; it won’t be long till foreign enterprises and banks have bought up the $50 billion in public assets that the current settlement obliges Greece to set aside as collateral.
People have also been pointing out that Germany’s own recovery was paved by loan forgiveness. Eduardo Porter, “Germans Forget Postwar History Lesson on Debt Relief in Greece Crisis, New York Times, 7/7/15, shows that in 1953 Germany made an “agreement that effectively cut the country’s debts to its foreign creditors in half.”
In “Economic Historian: ‘Germany Was Biggest Debt Transgressor of 20th Century,'” Der Spiegel, 6/21/11, Albrecht Ritschl said:
…during the 20th century, Germany was responsible for what were the biggest national bankruptcies in recent history. It is only thanks to the United States, which sacrificed vast amounts of money after both World War I and World War II, that Germany is financially stable today and holds the status of Europe’s headmaster….
In 1924, reparations from World War I, which Germany was unable to pay on schedule, were restructured by international agreement; repayment resumed with the aid of US loans under the Dawes Plan. Then, 90% of the amounts due were canceled under the Young Plan, which took effect in 1930. According to the latter source,
By 1933, Germany had made World War I reparations of only one eighth of the sum required under the Treaty of Versailles, and owing to the repudiated American loans the United States in effect paid “reparations” to Germany.
The 1953 London Agreement on German External Debts cut German debts left over from World Wars I and II in half.
As stipulated in that agreement, once it was reunified, Germany resumed payments on some other debts in 190 and finally paid off the remainder in 2010–almost 100 years after it started invading and damaging other countries in 1914. I am sure the Greeks would be delighted to have such extended payment terms. Or, on the other hand, if Germany had actually paid realistic reparations to Greece after World War II, the Greek economy might be in much better shape today.
Germany did pay something, per Wikipedia:
In 1942, the Greek Central Bank was forced by the occupying Nazi regime to loan 476 million Reichsmarks at 0% interest to Nazi Germany. In 1960, Greece accepted 115 million Marks as compensation for Nazi crimes. Nevertheless, past Greek governments have insisted that this was only a down-payment, not complete reparations….
On April 6, 2015, Greece demanded Germany pay it the equivalent of $303 billion in reparations for the war. Germany replied that the reparations issue was resolved in 1990.
That figure includes (updated for inflation) “€10.3bn for an occupation loan that the Nazis forced the Bank of Greece to pay,” according to BBC.
Famed French economist Thomas Piketty sums up the situation as follows:
“When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.”
In sum, the Greeks are saying that they deserve the same level of loan forgiveness that the Germans benefited from, and that the Germans owe them about the same amount as the Germans are saying the Greeks should pay to everyone else. It sounds like a rousing game of Monopoly, except that real people’s lives are at stake.
As the 7/15 New York Times editorial “The Eurozone’s Damaging Deal for Greece” says,
The guiding notion behind the creation of the European Union was to resolve problems like this through consensus and cooperation. Instead, the final 17-hour negotiating session was marked by acrimony not only between Greece and the European leaders, but also between Germany and France; between the German finance minister and the head of the European Central Bank; between north and south, east and west.
So the tragedy is not only that the Greek debt crisis has no end in sight, but that instead of the one-for-all-and-all-for-one ethic that was supposed to govern Europe, the rancorous talks showed a roomful of national leaders with sharply differing conceptions of what to do about a bankrupt fellow member.
Greece have long been caught in these historical currents, and I don’t think the Greek people will accept any more humiliation. They seem to think the Germans are greedy and hard-hearted, while the Germans seem to think the Greeks are lazy and untrustworthy.
Such feelings, 70 years after the end of World War II, don’t bode well for European unity and especially not for an integrated European economy.