The bailout crisis: Germany’s view of how Greece fell from grace

Alan Posener

The Guardian

By Alan Posener

Sunday 22 March 2015 00.04 GMT

Athens’ defiance of austerity demands and recalling of wartime atrocities have angered Germans already worried about rising nationalism and economic decline.

Did he or didn’t he? Last week, the biggest media story in Germany was whether or not Yanis Varoufakis had flipped us the finger. After a video of the Greek finance minister “showing the stinkfinger” (as Germans put it) was screened on a talk show, a satirist claimed he had doctored the video and that the finger-flip was a fake. A day later he recanted.

Experts pored over the “Varoufake” video like JFK conspiracy buffs over the Zapruder footage. No matter that the video dates from 2013 and has no bearing on today’s politics – the “Varoufake” story eclipsed riots in Frankfurt and terrorism in Tunis. For Germany, Greece is more than a pesky problem on the periphery of Europe. It’s an obsession.

Why? One can understand the Greeks’ obsession with Germany, which the Syriza government blames for austerity policies that have brought the country to its knees. But Germany has built a firewall round its banks to protect them from the fallout from a “Grexit”.

Its position – that Greece must honour the terms of its bailout – has the backing of most other EU members and EU institutions. It could regard the antics of an inexperienced government faced with the harsh realities of life in the eurozone with equanimity. This is, in fact, the attitude that Germany’s finance minister, Wolfgang Schäuble, has maintained.

Germans admire Schäuble for keeping his cool. Greek caricatures portraying him as a Nazi have caused outrage. Germans also resent Greek demands for reparations for the brutal occupation in the second world war, and hints that they might confiscate German property to enforce payment. The Greeks do have a point, and Germany is willing to negotiate. But using Germany’s past to blackmail Angela Merkel’s government in totally unrelated negotiations is not a good idea. For decades, Germany’s bad conscience has been exploited by its European friends. But there is a growing – and dangerous – feeling here that enough is enough.

Ironically, back in the 1990s, Helmut Kohl gave up the deutschmark and accepted the euro in order to reassure the French that Germany would not become Europe’s hegemon. In return, members of the euro club were supposed to abide by strict rules to ensure the common currency did not become like, well, the franc, lira or drachma. And now to have the past dredged up and flung in Germany’s face by a country that lied its way into the eurozone, refused to reform while it was rolling in cheap money courtesy of the common currency, can’t or won’t collect taxes properly, has been bailed out repeatedly and still doesn’t accept the rules – this could well be the final straw. The Greeks can congratulate themselves on a self-fulfilling prophecy the oracle at Delphi would have been proud of: nationalism is rearing its ugly head in Germany again.

Indeed, the rise of populism at home is a main reason Merkel cannot climb down. On the right, the anti-euro, anti-immigrant and vaguely anti-American party Alternative für Deutschland will probably get into the Bundestag in 2017. On the left, a campaign against the free trade agreement between the EU and the US is gaining momentum. On the streets, people have demonstrated in Dresden against “Islamisation” and the “lying press” and rioted in Frankfurt against the European Central Bank and capitalism in general. Squeezed by radicals on left and right, the pro-Europe centre may not hold.

The situation in the rest of Europe is even worse. Cave in to the Greeks, government officials mutter, and the next thing you know the Spanish will elect the populists of Podemos, the Irish will go for Sinn Féin and both will demand handouts, to be paid for by you-know-who. France’s Marine Le Pen will have more arguments for leaving the eurozone or even the EU. And let’s not even mention Britain. Meanwhile, Vladimir Putin tears up treaties, tramples on his neighbours’ sovereignty and threatens the EU’s eastern flank, and Islamic State kills people just across the Mediterranean.

When Athens threatens to turn to Russia, open its borders and let immigrants from Syria into Europe, or even wave Isis fighters through, it is not only behaving irrationally – you don’t threaten the people you want money from, unless you’re a gangster. It is destroying the glue that holds Europe together: trust.

Germans’ attitudes toward politics are informed by their history and based on Kantian ethics: ends never justify means. Rules, therefore, must never be broken, even if they are self-defeating. This is alien to Anglo-Saxon policymakers, who follow the utilitarian precepts of Jeremy Bentham and John Stuart Mill. And it is alien, of course, to southern European politicians, for whom political expediency will always trump principles. In the euro crisis, Germany has repeatedly seen the rules bent, broken, changed and broken again. The EU needs to understand that this is intensely worrying to most Germans.

At the deepest level, however, German exasperation with the Greeks is rooted in fear. At the end of this century, Germany will have fewer than 60 million inhabitants, 25 million fewer than today. By 2050 the demographic great powers of Europe will be Turkey, France and Britain (in that order).

Germany, a country with an ageing, shrinking, underqualified and poorly paid workforce, a country fixated on hammering metal rather than tapping touch-screens and addicted to unsustainably high exports, could find itself in an economic crisis sooner rather than later.

For the German elite at least, European integration is the answer. Germany feels that it needs to establish an economically stable, rule-based and politically united Europe while it still has the power to do so. Greece’s antics thus awaken the angst that dares not speak its name.

What to do? The Greeks have made their point. Many Germans inside and outside the government realise that austerity must be eased. They accept that Germany has benefited from the same set of euro rules that drove Greece into bankruptcy, and that Greece needs help.

What the Greeks ought to do now is to help Germany help them by going short on the rhetoric (and the “stinkfingers”) and producing realistic plans for reform. Their politicians are no longer playing primarily to a Greek audience. Europe is watching.

Classical Greek theatre was supposed to lead to catharsis. It won’t if Alexis Tsipras and Yanis Vanoukis overdo the clowning.

Alan Posener is a writer and columnist for the WeltN24 media group in Berlin