By Patricia H Kushlis
Since Greece’s founding in the 1820s, no hard left wing party has governed the country before SYRIZA came to power in January. There’s one thing about winning an election; another about negotiating a country’s vital interests at the international level. Alexis Tsipras’ inexperience and resulting ineptitude showed through in spades. (Photo left: Wikipedia commons)
The deal negotiated last weekend is worse for Greece than the one Tsipras walked away from a few days before. The Greek economy and the Greek people have suffered even more since SYRIZA’s election than they had since the first bailout was needed; and its diplomats must be cringing because surely they could have negotiated the country’s future more skillfully. Just saying No and calling a hasty, ambiguous referendum may not always be the best approach.
What about the others?
But what about the EURO-zone, the EU, the ECB and the German government plus all the rest of those countries who support austerity policies so dogmatically regardless of the consequences? A little less austerity and a bit more Keynes would likely have pulled the EU out of recession several years ago. Germany’s export driven policies which buoyed that country’s economy have relied on sales elsewhere – especially throughout Europe – but if other countries do not have the wherewithal to buy German products how long will this approach succeed?
This was not Angela Merkel’s finest hour.
Magnanimity was nowhere on display. It took French President François Hollande, EU Council and Polish President Donald Trusk and Christine LaGard at the IMF to shake this German government to its senses - albeit grudgingly.
A Bundestag vote is still needed for approval but now reportedly likely to pass. The public is divided. Meanwhile, the Germans have not helped their image abroad: precisely the opposite. Their hard headed rightist Finance Minister Wolfgang Shäuble has done much to dredge up the very worst World War II images of Germans - something post- war governments have all worked so hard to dispel for decades.
I don’t think, however, that all of the terms Tsipras' agreed to implement to unfreeze capital to Greek banks and restore liquidity are deleterious for the country. Perhaps, in the end, the Greeks - and certain other countries as well - may require outside intervention to do what their governments have not had the political will to do themselves – that is to free their country of questionable labor practices and certain tax policies that have hamstrung the economy and the country’s well-being for decades.
Greece may - or may not - be getting a pig-in-a-poke from a tax perspective, but raising the VAT is one way to collect more from the wealthiest than the poorest because the wealthiest spend more because, well, they have more to spend. The Greek economy has been straight-jacketed from Byzantine-like laws and regulations that have enhanced the power of micro-businesses, labor unions, a too large government sector, and the wealthiest for years. This has been compounded by the cartelization of certain professions and trades to the detriment of everyone else. The political price to change the country’s laws has been too heavy for democratically elected governments to enact.
Even on Sunday?
Neighborhood shops threatened by Sunday store openings? Well maybe, but I doubt it. It’s still far more convenient to walk to the local bakery for a fresh loaf of bread than to have to hike, drive or take public transportation to a distant supermarket which sells an inferior product. Open on Sunday? It wasn’t all that long ago that Germany, repeat Germany, kept all shops closed on Sundays for – I suppose religious reasons – too. Now it’s up to each state.
A day of rest? Amen.
Not a bad idea but how many Greeks actually spend even an hour of it in church? If I remember correctly - except for major religious holidays, weddings, funerals and baptisms - not that many. True, the church is an important symbol of nationalism – of Greekness – but regular attendance? That’s another question. Besides, one has to stand in Orthodox churches shifting from foot to foot on hard, cold marble floors besieged by wafts of breath-choking incense and repetitive Gregorian chant after Gregorian chant which have as much to do with today’s Greek vernacular as the Canterbury Tales have to contemporary English.
But what about the EURO-Zone and the European experiment?
How did they fare? A setback did I hear you say? Will it go belly-up? The fissures appeared in spades - rendering earthquake sized cracks threatening to tear the EURO and the continent apart. That is, unless the wealthy North suddenly finds self-interest in supporting the continent’s poorer South.
Certainly the Europeans got too far ahead of themselves when they created the common currency without simultaneously developing the fiscal institutions to support it “until death do us part.” The US learned the hard way in the 18th century with the Articles of Confederation. This first attempt at self-government failed for some of the same reasons the EURO is faltering now.
Yet, you would think the West Germans would have learned simply from their painful experience of bailing out the East to the tune of two trillion dollars after the fall of the Berlin Wall in 1989 - if I’ve got my figures right. Reunification happened for political – not economic reasons. Some in the West wondered at the time if the price tag had been worth it. The two economies were so different and the social mores so different. The West Germans had failed to realize how run-down the East had become under Communism or how costly it would be to transcend the euphoria of reunification and put Humpty-Dumpty together again.
Meanwhile it’s likely the German Bundestag will accept the Greek bailout terms despite Shäuble’s continued off the wall outspokenness - a position which does not reflect official German government policy and all too reminiscent of certain members of the US Congress who do not have the responsibility of governing. Problem is, as a member of the German government, he does. It's as if US Treasury Secretary Jack Lew went on national television and repudiated President Obama's emphatic support for the Iran deal.
The EU put pressure on Tsipras to replace Yanis Varouvakis, Greece’s controversial Finance Minister, to help clear the poisoned air. Tsipras responded - first by sidelining him and then accepting - or forcing - his resignation.
Maybe Merkel should follow suit and also find a replacement for Shäuble - Varouvakis' German equivalent - one more in line with German government policy and the country’s apparent desire to keep the European Union a union rather than retaining someone who is doing his utmost to see it fragment into a motley collection of potentially warring states.
Related WV post: "Greece: What Went Wrong and Why? What's Next?" July 6, 2015.