Greece, Germany and the Eurozone

Gunboat diplomacy in Brussels, rebellion in the Greek Parliament and Molotov cocktails in the streets of Athens are not simply the result of a technical fiscal adjustment. The single currency needs a new type of political litmus test.

In back door negotiations for the terms of a third Greek bailout, Greek Prime Minister Alexis Tsipras was described by EU officials as looking like a ‘beaten dog’. Athens’ creditors crowded out the Greek parliamentary agenda keeping alternative recovery models kennelled in. Merkel’s maxim, ‘if the euro fails, Europe will fail’, has in principle also meant more Euros in exchange for more Europe. The political currency has clogged up the political market place. Despite this fact, the media narrative of the Greek Eurozone debt negotiations has procrastinated from the political parts of the discussion.

{mosads}Alexis Tsipras, a radical socialist with an anti-austerity mandate from the Greek electorate agreed to further reform the tax and pension system, liberalise the labour market and open up closed professions. But before that he and his indigestible ally Varoufakis pissed off everyone in Europe with a brain.

How on earth could those guys believe that others will pay for their profound lack of knowledge of the free market economy? They are not happy with survival of the fittest? Then they should get their loans from communist countries. Not from the EU, i.e. Germany.

Neutral technocratic terminology is often used by European and member state institutions as well as in the media to describe the rationale behind the bailout terms. Fair enough to keep temper down. But the government of Greece has gone too far. And the people who elected them will pay the political bill.

The real message from Berlin to Athens after those inacceptable negotiations and the nonsense referendum in Greece is: Get rid of your communist government now. Have elections tomorrow. And vote correctly. Or things will not be nice.

Or as Jacob Kierkegaard from Peterson Institute in Washington DC put it in a Bloomberg Radio interview: “Mr. Tsipras can continue his career on T-shirts for students, replacing Che Guevara.”

German official hostility to the Greek government has been far from subtle. The German Finance Minister Wolfgang Schäuble recently said, “This (Syriza) government has done nothing since it came into office. It has only reversed measures. It reneged on previously agreed commitments. It negotiated and negotiated.’’

Merkel’s disapproval helped end the political careers of former Italian prime-minister Silvio Berlusconi and Greek leader George Papandreou. The timely resignation of Greek Finance Minister Yannis Varoufakis after the 5th of July referendum on the previous bailout terms seems to echo the same political pattern.

Germany de facto said: “Don’t bring him back to the table. Or forget about the money.” Or to put it more diplomatically: It is difficult to separate the sentiments of officials like Wolfgang Schäuble from Varoufakis’s resignation. Varoufakis himself said: “I was made aware of a certain preference by some Eurogroup participants…for my…‘absence’ from its meetings; an idea that the prime minister judged to be potentially helpful to him in reaching an agreement.” Yeah, damn right he was.

The former Greek Finance Minister has equated the new terms to the 1919 Versailles treaty, adding that ‘the deal had nothing to do with economics.’ While it certainly does have a lot to do with economics, the economics of the Euro itself have a constitutionally incestuous dependency on politics. In the build up to the referendum Jean-Claude Juncker, the president of the European Commission, which along with the International Monetary Fund and the European Central Bank, makes up the so-called Troika of Greece’s creditors, said that a no vote would mean they are saying no to Europe.

Tsipras has been forced into a U-turn. No, in fact he has committed political suicide. And rightly so. Some of the new bail out terms are even more stringent than those which he asked voters to reject in the referendum. Having been compelled to accept what the Financial Times has described as ‘the most intrusive economic supervision program ever mounted in the EU,’ internal insurgence was inevitable. He now had to contend with a mutiny of 39 deputies. On the street, Molotov cocktails gave a public face to this displeasure. Yesterday he was met by a renewed rebellion of 6 deputies.

In the hours immediately following the referendum result the Greek prime minister described the historical importance of the “no” vote, in protecting the fundamental values of democracy and sovereignty in Europe. This is bullshit. Syriza along with like-minded movements on the left and on the right poses a political rivalry to the Merkel-Juncker agenda of greater Europeanization and the stakeholder model of decision making. The truth is, those Syriza people in Greece don’t like the superior system which Germany and most other EU countries run: capitalism. However, they want its money. Because their own political idelology doesn’t earn any. It’s as simple as that.

The bipolar and unprecedented inoculation of a currency with an ideology has not made it immune to the political pluralism amongst its members. Antagonistic diplomatic action was required to keep it going. We need to look carefully at the political components of the new bailout deal. Financial noise in the agora, seems to follow the rhythm of successful German foreign policy. Tune in. Or get out.

Geiger is managing partner of Alber & Geiger, a brussels-based lobbying firm, and author of the EU Lobbying Handbook.