Greece, the Punching Ball of Germany

Human Wrongs Watch

ROME, 13 May 2016 (IPS) – Greece is again in the media, because a new negotiation is due between the embattled country and its creditors. The North-South divide of Europe is coming back with force (while the East-West relationship is increasingly looking as beyond repair).


**Wolfgang Schäuble and Angela Merkel in the German Bundestag, 2014 | Author: Tobias Koch | Source: OTRS | Wikimedia Commons

The German minister of Finance, Wolfgang Schäuble, has come back with his peculiar view of the economy as a branch of moral and ethical discipline, and not as a reading of reality.

He has asked the Greeks “to not get distracted” by the refugees crisis, and not forget their primary task, which is to pay their debt. The request is to cut 2% of the Gross National Product; in case there will not be a 3.5% budget surplus within 2018.

Such parameters have never been reached by any country in the world, on occasion though only for a short period. And these are totally out of reality in a small economy, which has lost 25% of its GNP in seven years, and is facing a serious deflation because of lack of demand and because of daunting unemployment caused by the austerity programs.

This has lead to a once unimaginable situation: the International Monetary Fund, against which thousands of mass demonstrations have been held worldwide, as the symbol of fiscal intransigence and total disregard for social issues, has been the force for a more lenient approach against Germany’s wishes.

The IMF has declared that either some measures must be adopted for cutting the impossible amount of the debt, or lower interest, or a longer time or it will not participate in the negotiations. This Germany cannot afford.

Schäuble is representing not only the general aversion of German citizens toward leniency for countries from the South, who have spent beyond their means, and must be now disciplined, there is also the fear of playing the game of the extreme right wing party Alternative fur Deutschland (AfD), which is now projected to be a decisive force in the next German elections.

Its electors besides being anti euro and anti refugees are also opposed to any help to Greece and any European solidarity. So Schäuble is playing the strong guy not giving any ammunition to AfD.

This strategy of robbing the political platform for the extreme right wing parties, has led the traditional parties, and especially the social democrats, to take positions incompatible with their electorate, without any visible gain.

A good example comes from the resignation of the Austrian Prime Minister, Werner Faymann who reversed the original position of openness to immigrants, to erecting barriers and refusing to apply European norms to refugees. Faymann declared: “we are not going to leave to the extreme right the banner of curbing refugees”.

The result is that the Freedom Party, came second in the September regional elections in Northern Austria. Faymann then took a harder stance, menacing to close the border with Italy.

And on April 24, the Freedom Party candidate, Norbert Hofer, won the first round of the Presidential elections, with more than a third of the votes. For the first time since the end of the war, the President will not be from the two traditional parties: Social Democrat Party and the Austrian People’s Party that received together only 22% of the first round vote.

It is clear that this strategy lends legitimacy to the extreme right wing parties, and alienates the traditional faithful.

Schäuble accused Draghi, with its monetary policy of low interest, (which affects those with strong traditions of savings, like Germany and the Netherlands), of being responsible for 50% of the increase in votes for AfD.

The growing loss of moral leadership in Germany, increasingly centred on a domestic agenda, and at the same time public urging the other countries to follow its priorities is becoming a serious problem for Europe.

Economists know well that the feeble demand still alive in Greece is also due in great measure from the pensioners who act as a safety net in a country with large youth unemployment.

But now, after eleven cuts in pension, the request is for another new cut of 6%. Meanwhile hospitals are without bandages, schools without books, public transport is in a mess and the country on its knees.

Schäuble must have read the study from the Berlin European School of Management and Technology (ESMT). The study demonstrates that 95% of subsidy to Greece went to bail out the banks (largely German and French), which were overexposed with Greek bonds.

According to ESMT, only 9.7 billion euro of a total of 184.6 billion reached the Greek citizens. About 86.9 billion went to pay old debts, 52.3 billion to pay accumulated interests, and 37.3 billion to refinance the Greek banks. Why Schäuble does not present these figures to German citizens does not present these figures to German citizens to show that it is not about solidarity, but creditor’ s interests ?

There is a clear lack of an analysis on how different are the Bonn’s Germany and the Berlin’s Germany. The most salient trait is that Bonn’s Germany was an active engine for European Integration.

To get accepted the German proposal for the creation of an European Central Bank , Helmut Kohl agreed that the first governor would not be a German (it was Win Duisenberg, a Dutch national).

For the Germans, who were afraid of dropping the strong Mark for the unknown euro, was quite a shock. Now Draghi had to fight to phase out the 500 euro notes (widely used for illicit operations), because it did remind the Germans of their 500 Marks note…

And Schäuble, (and Merkel), who always tell others what to do, suddenly became deaf when others did the same with them. The IMF has now again repeated what also OECD have been saying for a long time.

Berlin should reinvest at least some of its large economic surplus into the economy, as an urgent and necessary measure to speed up Europe’s recovery. IMF has now come up again with the same request, but Schäuble finds it more convenient to attack Draghi than to implement some of the IMF recommendations.

The German Parliament is to approve a law, which gives access to national welfare only to those who have resided in Germany for at least five years. Germany is coping with Great Britain, that has this clause in the negotiations with Europe to avoid its exit from the European Union.

This is the first negative result of the concessions given to Great Britain, which will hold a referendum on Europe in five weeks from now. It was always feared that such concessions would set a precedent for other member states. Germany is the first one…..

So, the Greek agony is here to remind all of us that the constant rise of xenophobes and nationalist parties at every election has not generated until now an appropriate response from the traditional parties, and especially those from the left.

The xenophobes are aiming to form an international coalition and Marine Le Pen is going to campaign in the UK against the European Union. It is interesting though, that Donald Trump has refused to meet any of them, not because of ideological differences, but because he has no interest beyond American borders.

He has expressed positive views on Vladimir Putin, as all the right wing European parties have also done (Russia even gave a loan to Le Pen’s party). All this should bring us to reflect deeply when we see Europe, again led by Germany, donate 6 billion dollars to an openly autocratic Recep Erdogan; and block 1 million Syrian refugees (and open the doors to 70 million Turks).

Democracy is on the wane…. May be we should oblige students to read “Authoritarianism goes Global: the challenge to Democracy’, written by Christopher Walker, Marc Plattner and Larry Diamond.

They repeat what we know: that in times of crisis, the credibility of a strong man increases exponentially. But their analysis is updated and worrying. And we have only to look at the past Presidential election in the Philippines, to see the winner as a cross between a strongman of the past, like Ferdinand Marcos, with a strident nationalist and xenophobe, like Trump.

Rodrigo Duterte has won the elections by promising the execution of thousand of criminals, the expulsion of foreigners, and “not letting the niceties of democracy compromise the need for exceptional measures against corruption and crime”.

How is it possible that we hear the same language in so many different parts of the world?

Should we agree that we are in a global economic, social and value crisis, that the present globalization is dying, and therefore we are in a time of transition to something of which we have no idea?


Roberto Savio

*Roberto Savio is the founder and former Director-General of international news agency Inter Press Service (IPS).

In recent years he has also founded Other News, a service providing ‘information that markets eliminate’.

*Savio’s Op-Ed was published in IPS. Go to Original

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**Image: Wolfgang Schäuble and Angela Merkel in the German Bundestag, 2014 | Author: Tobias Koch | Source: OTRS | Wikimedia Commons

2016 Human Wrongs Watch

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