At this point in the eurozone crisis, the only question to ask is, ‘What are the Germans playing at now?’ We Irish had better figure it out, because after the Germans get finished playing their game with the long suffering Greeks, they’ll inevitably turn their attention to the other poor men of Europe, namely Spain, Portugal and Ireland.
So far the clues point towards the Germans intimating that they may want to trigger a disorderly default in Greece so that Greece falls out of the eurozone – and out of the domestic political problems of Angela Merkel.
Apparently the Germans imagine that their banks are now strong enough to withstand a Greek default. Sounds pretentious enough to me, but then, Angela has always had a pretentious streak. When you have forced the rest of Europe to believe that your banks are strongest on the continent and that they had nothing to do with the gambling that took place pre-2008, you can afford to be pretentious.
So now the thinking goes that Merkel can stop the bail-out loans (which, let’s face it, are never going to be repaid) and thereby force the Greeks out of the single currency. Her taxpayers will then stop complaining that she is pouring their money into a country full of Mediterranean layabouts.
Meanwhile, the Spanish have accepted a bailout…..sorry…A LOAN, NOT a bailout….for their troubled banking sector. Spanish Prime Minister, Mariano Rajoy still refuses to use the word “bailout” – or any other word for that matter – and referred mysteriously simply as “what happened on Saturday”. He went as far as to say that Spain’s emergency had been “resolved” (“thanks to my pressure”, he said) and then jumped on a plane to Poland to watch the national football team play (“the players deserve my presence”).
The amount Spain received, €100bn, matches that of the bailout Ireland accepted two years ago for its entire banking recapitalisation. However, it is but a drop in the ocean for Spain, for what will inevitably be required to recapitalised their ailing banking sector. The €100bn only covers approx 30% of the banking marketshare….there will most likely be more rounds of bailout money to follow.
And what of Angela? Well, whilst shoving the Fiscal Stability Treaty down the throats of her European minions, it seems she is coming up against strong opposition at home. The German opposition parties are demanding;
– The strengthening of the European Investment Bank.
– Bonds for the indebted countries of the EU
– Better use of the EU structural funds to promote growth.
– A financial transaction tax.
Meanwhile, Angela is doing everything she can to halt or limit the amount of money that needs sending to Greece to try and placate her own voters at home, and to force Greece out of the euro, which is ultimately her end game. One wonders if Germany has a “Rewards Card” with Western Union, given the frequency of bailout upon bailout they’ve sent South.
Merkel has said on several occasions in the past two years that Germany and the eurozone will do ‘whatever it takes’ to keep Greece in the single currency. So you have to ask yourself if the last tranche of funds, €325m (that’s MILLION with an “M”), was so significant a sum to get into a tizzy over. Given that Greece already has €14.5bn (that’s BILLION with a “B” in debt repayments due, I would surmise that “No, it’s not”.
In terms of any Western country’s finances, €325m is petty cash. There are private individuals walking around the streets of most capital cities in the world who could write a personal cheque for €325m.
The €325m is not a reason. It’s an excuse.
It’s an excuse to put more pressure on the Greeks by way of more humiliation. In other words, the Germans want to find out how far they can push the Greeks before the Greeks snap and walk out of the euro – leaving Merkel saying ‘more in sorrow than in anger’ that ‘we did all we could to help, but they decided to leave.’ Politicking at its best!
However it is unlikely the Greeks will snap this week. Greek political parties actually humiliate themselves – and their electorate – by signing public promises to stick to the bail-out deal no matter how the vote swings in the upcoming elections.
That would be the real achievement for the Germans, because their aim is to drain democracy out of EU affairs. Why? Because too many electorates refuse to see things the Berlin way.
In short, what the Germans are demanding is the end of politics in Greece. There will be only one policy on offer, whatever combination of political parties forms the next so-called government in Athens: it will be the Berlin policy.
Ireland should not be surprised by this. The Irish electorate saw the end of politics when the Government capitulated to Brussels and forced the electorate to vote twice on the Lisbon Treaty and the more recent and shameful “YES” vote on the Fiscal Stability Treaty that was waved in front of Irish men and women as some sort of boogie man.
This is why the new German-directed intergovernmental treaty demands that the laws implementing austerity must be put ‘into national legal systems through binding and permanent provisions.’
The treaty is framed to force all countries ratifying it to invent laws which are beyond the touch of any national parliament ever to be elected. This ‘permanent’ law is to be law beyond the reach of voters. It is to be law the next parliament elected in Ireland, and the one after that, and the one after that, CAN’T EVER TOUCH!!
That’s what the Germans are playing at. Their intent is to govern all the countries of the EU now: German-designed law beyond the reach of any national ballot box.
And that is why they humiliated Greek political party leaders by forcing them to sign public pledges to ensure just that. And if they don’t – well, it is now easy enough to open the trap door and let the Greeks fall out of the eurozone and perhaps out of the EU altogether.
Still, some people persist in believing the German propaganda that all this – the austerity, the troika demands on Greece, the surrender of national sovereignty to EU institutions – is necessary to ‘save’ Greece, to keep it from declaring bankruptcy and leaving the euro. (I will leave aside for the moment the fact that leaving the euro is exactly what Greece should have done at the start of this series of disasters two and a half years ago.)
But that propaganda is not true. The policy being followed for Greece these last two years by the troika as active inertia. They are active, every three months, yet another set of discussions, more drama, but it’s inertia. They basically have not abandoned an approach that has proved to be totally ineffective. What is being pursued right now is more of the same, and it will not succeed.
Greece has no long-term option but to ask itself how do we restore growth? It leads you to the uncomfortable conclusion that Greece will have to take a sabbatical from the eurozone.
It will have to go through a major debt reduction. Then it must have a major devaluation to make it more competitive, which Greece can only do once it is out of the euro and back in the drachma. Only then can it regain the path to sustained growth.
Which is where we come back to the Germans and the game they are playing with Greece. No one wants to go down in history for being responsible for this, not Greek politicians, Mrs Merkel doesn’t want it, no one in the EU wants it, no one in the IMF wants it. So because no one wants to go down as responsible for this historic decision, it doesn’t get taken, Greece continues to be stuck in this active inertia, and things get worse.
In other words, the Germans and EU powers running Greece now know the answer is to get the country out of the eurozone. But for political reasons no one, least of all Mrs Merkel, will say so.
So this dishonest game is being played of putting so much pressure on Greece, of heaping so much humiliation on the politicians and the people, that at some point they will break and say ‘Enough, we are getting out.’
Unfortunately, this dishonest manoeuvre means that the German-led EU is piling tens of billions more in un-repayable debt on Greek shoulders as they wait for the country to reach breaking point.
Exactly the way the German-led EU has piled billions in un-repayable debt on Ireland’s shoulders. As I said at the beginning, this game won’t stop in Athens.