The Germans dominate Europe, they use their power to ruin Greece and enforce their backward ideology, the laws and policies of Greece are not written in Athens but in Berlin, there are shortages for food and medicine across Greece, the people suffer horribly as the German government punishes them more the more they resist. No it’s not 1942. It’s 2015 and we need to talk about it.
Today all eyes are on the resounding no vote in the referendum in Greece. The Greek citizens were asked to vote to either accept or reject the terms being offered by Greece’s lenders – the European Commission, the European Central Bank and the International Monetary Fund . They (thankfully) voted oxi – no to a deliberately harsh deal that would have suffocated Greece under the thumb of even more austerity. Of course the result does not end the crisis. They are desperately running out of money and it is very difficult to predict what will happen next.
Everybody wants to know ‘how did it come to this?’ ‘Why is the Greek economy so stuffed?’ Inevitably the answer involves something like ‘they over-spent for years’, ‘no one pays taxes’ or ‘their government is corrupt’. All claims have elements of truth in them. Yet these common responses feed into the victim blaming narrative that lets one of the most monstrously right wing politicians of recent history completely off the hook. When the left look for someone to hate we turn to Tony Abbott, George W Bush or even back to Margaret Thatcher. But if you’re looking for someone to hate (and to hate in politics is sometimes a good thing), look no further than German Chancellor Angela Merkel.
Angela Merkel grew up in communist East Berlin and like many people who come from failed communist states, she has a strong aversion to socialistic economic policies. She is the leader of the Christian Democratic Union – Germany’s biggest right wing political party. As head of the largest European economy for 10 years, Merkel has set the agenda for Europe and is sometimes referred to as “the decider”. As President of the European Council in 2007 she played a key role in negotiating the Treaty of Lisbon – a treaty that strengthened the powers of the European Union at the expense of individual European national governments. Many have argued that this has limited the ability of smaller states to control their own affairs – not an issue for Germany though, which dominates all key Europe wide institutions. Indeed for Merkel’s Germany, using Europe wide institutions to dictate policy to other nations is becoming a habit.
So what was wrong with the deal offered to Greece? Greece is in the middle of a Great Depression. Their economy has shrunk by a quarter in 5 years and their unemployment rate stands at over 25 percent. They literally have no money. The IMF and the two Euro institutions that Merkel basically controls – the European Commission and the European Central Bank – have offered Greece a second bailout. The conditions for the bailout however was continued austerity. The deal demanded a further cut in spending on pensions, an increase in sales taxes, an increase in the retirement age, the abolishment of heating oil subsidies for the poor, full privatisation of the banks, further reduction in collective bargaining rights and striking rights of unions, and privatisation of the ports, regional airports and rail network. A neo-liberal dream. All this comes on top of 7 prior austerity packages mandated by the Eurogroup which have massively increased taxes and massively cut public spending on everything from the wages of government employees to education and health. Can’t you see Joe Hockey smiling?
The Greek people are suffering and instead of getting the support they need from their government to train for and find a new job, start a new business, get the medicine they need and get through this crisis they are being fired en masse and left to fend for themselves. Of course not only are these policies harsh to the point of being immoral, they are bad economics. As Nobel prize winning economist Paul Krugman has argued, Greece has slashed their spending so much so quickly that it has destroyed any chance of an economic recovery. What the government does effects the market more broadly and by crashing its way to a surplus, the Greek government has not inspired confidence in the market but instead has led (rather predictably for Keynesians) to businesses and individuals also cutting their private spending. Five years of austerity has certainly not brought Greece out of its depression, it has made it far worse. As Joseph Stiglitz recently noted, European institutions hold “criminal responsibility” for the terror that they have wrought on Greece’s economy. At the head of the most wanted list must sit Angela Merkel.
And of course no economic growth means less and less tax dollars coming in. No matter how much you raise taxes you will see less government revenue, cancelling out all savings. This is exactly what happened. Greece’s debt to GDP ratio remains as high as it has ever been – 177 percent. If the Greek workers don’t like all this and want to use their industrial muscle and strike, well they’ll discover they no longer can because of the new “labour market reforms”. Yes, many of these policies are aimed at reducing the power of the workers at the expense of the rich. Workers can’t strike but businesses can buy a port at a record low price. And so after 5 years of this nightmare the Greek citizens protested in the only way still available to them – at the ballot box. They elected a new and untried ragtag collection of socialists in January who in turn gave the people themselves the decision whether to accept the new deal. In an attempt to bully the Greek populace into voting yes, the European Central Bank imposed capital controls, limiting the amount of cash Greeks could withdraw from ATMs each day and preventing anyone from moving their cash across the border – even if it was to buy foreign medicine not available in Greece. A yes vote would have quite possibly brought down the Greek government. Merkel is a lot smarter than George W Bush and her attempts at regime change won’t cost nearly as many soldiers’ lives. The former Greek finance minister Marxist rockstar Yanis Varoufakis was right to say that the Europeans were terrorising the Greeks this week. However as people often do when bullied, they reacted in the opposite way. Every district in Greece voted no to the deal.
Of course if Greece had control of its own currency and did not have its financial policy dictated to it by the European Central Bank, then it could print more of its own money. Inflation is hardly a worry in such a depressed economy. But of course that is what the European project is about under Merkel’s reign – centralising control away from national democratically elected governments. You might ask yourself if the austerity obsessed lending deals are so bad for the economy, why would Merkel and her European minions demand them? The answer lies in the fact that this is not just about economics but about politics and about ideology.
The European unification project began as a noble goal. After two world wars ravaged Europe, they would ensure no wars took place between European powers ever again through political and economic unity. Yet the creation of institutions that set the agenda Europe wide, and the ability of a handful of powerful elites such as Angela Merkel to dominate those institutions, has simply meant that much of Europe finds itself once again under control of others. Merkel is certainly not afraid to throw her power around and meddle in the domestic politics of foreign nations. In the lead up the January Greek elections, there were leaks from the German government that suggested a Syriza victory could result in a Greek exist from the Euro (something that polls said Greek voters didn’t want). The message to the Greek voters was subtle but clear – don’t vote for Syriza or we’ll make things worse for you. The Greeks voted for Syriza anyway. Merkel is finding that while democracy is still a thing, she can’t always control Europe. Although she is doing her best; even after today’s no vote, the Greek finance minister has been forced to resign because the European institutions have requested his absence from any future meetings. In his resignation he declared that he shall “wear the creditors’ loathing with pride”. He will be missed and his forced resignation is outrageous.
Merkel and many of these others in the European Commission and European Central Bank are ideologues. Rabid small government neo-liberal capitalists. They know what they demand is bad for the average Greek but they see this as their chance to re-shape Greece to their liking. To sell off the farm for good. To turn Greece from a bureaucratic welfare state to a nightwatchman state. And they don’t necessarily care about the average Greek, like all hyper capitalists they care first and foremost about the top one percent.
Some might say that that is fair enough. Merkel has to look after Germany first and Greece owes around 56 billion dollars to Germany as well as over 250 billion to other nations and banks. It is the fault of the Greeks that they wanted to borrow so much money and if it comes down to a choice between paying back they money they owe or spending their money on pensions for elderly poor people then unfortunately Merkel is going to get you to throw the old people out on the street. Tough but fair. No one to blame but themselves. Except that’s not quite how it happened.
Remember the US Wall Street collapse that set this whole economic train wreck in motion? That was in large part caused by the sub-prime mortgage crisis. Banks were lending money to people who couldn’t afford it as a way to finance investment. Sure some people blamed the clueless home owners who bit off more than they could chew, but an even larger share of the blame had to go to the greedy banks who undertook predatory lending without much thought to the future. The whole thing was reminiscent of the mafia godfather who lends money to some poor desperate schmuk and then uses the leverage he has to control and manipulate him so that every advantage can be squeezed out of the deal.
Things weren’t so different with Germany and Greece. When Greece looked like they were going bankrupt in 2009, Germany and the European institutions stepped in and offered to loan them huge amounts of money. After all there is power to be gained from being the head of a global currency like the Euro and Germany had no intention of seeing the Euro weakened by Greece’s bankruptcy. Furthermore, loaning money to Greece provided Germany’s predatory banks with a cheap place to invest their money. By flooding Greece – and other southern European countries – with money, Germany also propped up their economies in order for them to be able to continue to buy German exports. German businesses did very well in the short term out of all this. By including privatisation as a precondition for the loans, Merkel ensured that the businesses that her government was looking after could ravage these newly propped up markets like a vulture to a corpse
The Germans, however, lent more than they could afford. Like most capitalists in a deregulated market, they saw dollar signs and went unthinkingly for short term profits and power. Now, faced with a new Greek socialist government that isn’t playing along nicely anymore, they are panicking. Merkel is hell bent on bringing down the Greek government and restoring her neo-liberal Europe wide regime. Hopefully the people don’t let her.