How Greece Reveals Europe’s Deficit of Compassion

This week, we face up to the disaster of the Euro and the deeply flawed European project.

As someone who once worked for the European Commission, it pains me to write about Europe with such dismay. I hate to write it as a historian, who was overjoyed by the expansion of the EU farther east, because it seemed to herald a continued era of continental peace and prosperity. I am disappointed because the system of a common currency, the apotheosis of the European integration project it seemed, did not include the necessary safeguards to protect this European dream. Having just returned from Greece, I am dismayed that the Greek people, who first felt betrayed by their corrupt overspending government, now feel abandoned by Europe.

There are moments when Europe’s mask falls, and such a moment came this week with European reactions to imminent Greek default on debt, and potential expulsion from the Euro and European Union. When a member might be asked to leave the table, the rules for belonging to the club become achingly obvious. When the actual rules are rather more crude than the idealistic expressed goals of the club, the EU begins to show its face, and it’s ugly.

In 2012, the EU was presented with the Nobel Prize for Peace, having “for over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe”. And indeed Europe’s greatest recent achievement has been this long peace, from 1945 to the present––one so long that we seem to have forgotten what war is like and what causes it. From the ruins of the Second World War, Western European societies crafted social democracies that might well be seen in future as the greatest achievement of compassionate civilization.

There was a strategic aspect to this compassion. There was a desire not to make the same mistakes as with the punitive peace of the First World War: not to repeat the economic hardship and resentment that Germany experienced, which led in part to the rise of extremist politics. The Marshall Plan, a remarkable relief package, was meanwhile a striking counterweight to the threat of Communism. (And it is telling that, since the end of the Soviet Union, there has been a systematic rollback of the social state). Such lofty projects of planning and spending are by now a thing of the past, of wealthier years, and so too we have lost its safeguards. But, we should remember that in the recent past social solutions for economic hardship were the norm.

When the mask of European peace and brotherhood falls, how do we describe our current state of affairs? In the EU today, we have neo-liberal adventurism in the form of laissez-faire economics, in a free market with a rogue common currency, a project hijacked by unelected bankers and technocrats who enjoy ridiculous salaries. I saw this firsthand working in Brussels. I see all over Europe a deficit of compassion in relation to the poor: one need not only see how the EU treats migrants trying to enter from outside, but how it treats its poor members within the Union itself. We are speaking of what are still some of the richest countries in the world, who are more willing to spend either in the name of nationalist allegiances (the reunification of Germany cost 2 trillion Euros), or in the name of class interests (the 2008 UK bailout of the banks cost 700 billion Euros), than for the cause of European solidarity (a relatively small Greek debt of 250 billion).

Perhaps peace in Europe has always in the post-war period been the result of economic cooperation––the intermingling of industries such as cole and steel, an openness on capitalist terms. But this week the fragility of such a contract, when we fall on hard times, becomes obvious and I am convinced we can do better than this. The lofty goals of solidarity are today made secondary to the role of the EU as creditor and its poorer states as debtors.

And now the finger pointing begins, with the European President, Jean-Claude Juncker, former Prime Minister of a tax haven, expressing his sense of “betrayal” because of Greek rule-bending and blackmail. But is not his remarkable display of public acrimony a diversionary technique from all the ways the EU’s system of credit and debt has failed, the flaws within the currency system that Juncker himself oversaw as first permanent President of the Eurogroup?

When casting blame we need to look not only at the question of debt relief, or the flaws within the common currency, but also at the failed remedy of austerity. After Greece’s corrupt elites rode the easy lending wave of the Euro’s introduction (and, yes, shouldn’t Greece have kept a closer eye on the till and its taxation system?), ordinary people there are now asked to bear the load of debts. Not export countries like Germany who have benefitted greatly from the resulting low Euro exchange, or the institutions of overpaid bureaucrats who designed the faulty system. Austerity–– which for years economist such as Nobel Prize winner Paul Krugman has criticised––has had the disastrous effect of destroying the Greek economy so that no matter how many cuts have been made to public programs, it is impossible for Greece to generate the income to pay down its dues.

The surrounding debate has brought out nasty cultural stereotyping. Greece is blamed as the primary architect of its woes, enduring the indignity of arguments made in the press about how little they work (they work more hours than the Germans on average). Set up against this spendthrift, indolent Greek is the thrifty “Schwaebische Hausfrau” (Black Forest Housewife), as the German press puts it, personified by Frau Merkel (who incidentally is not from Southern Germany). And when homemaking finances are applied to whole countries, the effects are catastrophic, because there is no stimulus for growth.

Meanwhile, other countries, who have mistakenly swallowed this foul medicine of austerity, are infuriated that the Greeks might “get away” with not doing so. And let us think of those other countries, many of whom risk defaulting themselves (Italy is apparently “too big to fail”, an ominous phrase if there were ever one). Indeed, one of the strangest aspects of the Greek dilemma is that if the patient refuses to die of the same therapy applied to others, then a terrible contagion risks spreading throughout the whole hospital. Is this really Greek’s fault, or that of the architects of the European common currency?

We need a fast solution when only a lengthy overhaul of the system will do. The best solution is more Europe, properly democratic, with central taxation, a centralised fiscal policy (essential for a common currency), and social services that balance rich and poor regions. But with Europe so discredited, now we are likely to return to a system where smaller nation states take on that task. And with that devolution, we risk losing the great achievement of European unity, as we see more countries falling away, perhaps into the even more authoritarian capitalism of Russia.

We need to ask Europe: is the relationship between member states one of banker and creditor? Or is it one of solidarity? Is there not more at stake than simply this mountain of debt? With technocrats and bankers at the helm, I am pessimistic. The Greeks voted Syriza democratically because they saw the undemocratic neoliberal EU for what it is: an emperor with no clothes. The result––and we will see with the referendum this weekend––might be that Greece will have to have to pursue a more compassionate contract alone, dressing itself in rags and patches.

by Joseph PEARSON

Berlin 30.06.2015