Part man, part bull
Merkel courts the maddening Minotaur of the Euro-Zone crisis at the Greek peoples' peril. Gamal Nkrumah
ponders the German chancellor's pyrrhic victory
Behind every theorem or assumption about how dangerous the Euro-Zone will turn out to be without Greece resides a simple query. To what degree will Germany, Europe's economic powerhouse, locate its national interests in a shared understanding of the pivotal importance of sustaining a collective European integrated economy, including Mediterranean countries, the cradle of European civilisation. The Mediterranean nations, embodied in Greece -- but encompass Spain, Portugal and Greece -- are systematically dismissed pejoratively as "reckless", "irresponsible", and even "capricious" by the more affluent and better-organised northern Europeans as epitomised by the Germans.
One aspect of European integration seems clear enough. The clean, clinical lines of German and Nordic efficiency have given way to the messier manner of the traditional Mediterranean tackling of financial affairs. Whatever the complexity of the financial security Mediterranean Europe seeks from following in the slipstream of their supposedly proficient northern partners in Europe, emanating from Frankfurt and Brussels, will rest on the weight the lackadaisical Mediterranean nations affords to co-operation with their northern counterparts.
All this myth-making probably sounds rather abstract. But the unfortunate truth is that it actually has chilling real-world relevance in contemporary Europe. The Bull-headed man of the Mediterranean labyrinth in Crete, the monster Minotaur, beloved of the Cretan King Minos, is Greece's modern $130 billion national debt. However, the Minotaur that the West, and especially Germany Greece's major benefactor wish the most to slay is the motley leftist parties that are fast gaining in popularity among the Greek electorate. Many of these parties would like to see the euro ditched as Greece's official currency in favour of the drachma. Argentina broke its peg with the US dollar a decade ago, defaulted on its foreign debt and has since flourished.
The string trail spun by Adriadne, daughter of King Minos who fell in Love with Theseus who in turn butchered the monstrous Minotaur, is the German-led demand on Mediterranean nations such as Greece, Portugal and Spain currently undergoing drastic austerity programmes aimed at reducing their public debt and budget deficits.
Greece's modern-day leftist political parties want their country to reject a second 130 bail-out by international lenders and opt instead for full-scale default, an occurrence an outraged Merkel cannot contemplate. But is Adriadne of yesteryear the German Chancellor Angela Merkel of today? And, is Theseus the current Greek Prime Minister Lucas Papademos?
Queen Pasiphae of Crete coupled with a bull to produce the monster Minotaur. But there are those in Brussels who suspect that the present-day Pasiphae is Merkel flirting with Papademos to nullify secret German schemes for Greece to be publicly declared bankrupt. "It would be better if Greece stepped out of the euro," suggested Bavaria's Finance Minister Markus Soder.
Yet euro-zone finance ministers meeting in the Belgian capital Brussels confirmed their optimism that Greece deserves a second bailout that the Mediterranean nation so desperately needs to stave off bankruptcy. Merkel, in particular, partially recanted the folly of successive Greek government's failed policies that produced disastrous results. However, the German chancellor is in no mood to make a martyr of Greece.
A United States of Europe appears to be her primary objective -- with Germany, of course, at the helm. "I will have no part in forcing Greece out of the euro," Merkel persisted in an ironic quip that many of her right-hand men believe to be just as dangerous as the mythical Minotaur.
Still, Angela Merkel, the contemporary Adriadne, has strong supporters. The Greek crisis is "no threat to the world economy" boasted European Central Bank (ECB) executive board member Joerg Asmussen.
Whether the modern-day Adriadne admits it or not, Germany is far deeper in Greek insolvency preparations than conventional wisdom would have us believe. While Merkel firmly believes that Greece should remain in the euro-zone, her own Finance Minister Wolfgang Schauble is of the persuasion that Germany ought rather to roll the dice on Greece default.
"Strangle Schauble" as he is nicknamed in Brussels wants Greece to submit to a humiliating "haircut" on the bulk of its debt held by German and other European banks. In short, he would prefer to see Greece be declared defaulting by financial markets. Schauble, therefore, concurs with the Greek Left. Among the main leftist parties in Greece are the Democratic Left, the Greek Communist Party, Syriza (Coalition of the Radical Left), and Pasok (the Pan-Hellenic Socialist Party). Most Germans with the notable exception of Merkel, want Greece to go bankrupt.
Still, the European finance ministers must be feeling pleased with themselves. The Marathon meeting in Brussels does nothing to assuage the anxiety and anger of the long-suffering Greek nationals whether they be the Democratic Left, the Communists, Syriza or Pasok. Small wonder then that the German flag was set afire on the streets of Athens.
"If we achieve a Left-dominated coalition government, we may need to discuss an orderly return to the drachma," Theodoros Dritsas, leading MP from the Syriza Party boasted. "We are being asked to take even larger doses of medicine that has proven to be deadly," pointedly pontificated Hieronymos II, head of the Greek Orthodox Church.
The German move on the Greek debt swap turned out to be a major political masterstroke. But the leaders of Europe should also be alive to the possibility, however slim, of a surprise in Greek economic performance in the months ahead.
Sadly, if predictably, the Greek leftist opposition has splintered under pressure. Greek taxpayers are questioning policies that shield big business, prop up private sector and government wages and jobs that shore up the detestable sham of a failed state masquerading as an integral part of Europe. However, countries like Greece in the European periphery realise all too well that the politics of extra-stimulus and the scrapping of debt has dire long-term disastrous consequences and is difficult in the extreme in the short term.
"The true winners of the 2004 and 2009 European elections were the New Right parties across EuropeŇê¦ Yet, the proposition that the New Right have been the proponents of the introduction of emotions to the politics of immigration does not reflect the idiosyncrasies of that shift in European politics," said Kostas Maronitis. Maronitis is right to expose the process of rescuing Greece as a farce. But the real import and application of his argument lies in the political sphere of European politics.
"It would be more accurate to argue that the New Right have singled out fear as the most important and effective emotion for the communication of their anxieties and dissatisfaction," Maronitis extrapolates. "Fear can be defined as an emotional response to a familiar or unfamiliar danger of a real or imagined character," Maronites elucidates. The gurus of the New Right distrust those they pejoratively dismiss as "unscrupulous" Mediterranean leftists as much as they abhor the Muslims and other immigrants from Africa, Asia and South America.
"Cultural disintegration and the limited capacity of the welfare state have not been the only concerns of the politics of fear," Maronitis explains. "Racism understood through the prism of biological hierarchy is back on the agenda in Germany with a book entitled Germany Does Away With Itself (2010) by Thilo Sarrazin, a Social Democrat and board member of Germany's Bundesbank. Maronitis accurately exposes the very concept of genuine European unity as a mockery. The European Union ought to put the interests of Europeans above the narrow national interests, though the chances that they will do so are slim.
The Greek General Confederation of Labour is up in arms. Greece's economy suffered the fifth consecutive year of recession this year. The results are catastrophic.
"What happened recently marked the end of the theory that markets, and especially banks, financial markets, can be self-regulating," General Director of Greece's Foundation for Economic and Industrial Research Yannis Stournaras, Re-Public, an online journal focusing on innovative developments in contemporary political theory and practice. "If banks turn away from their fundamental role, that is to transform deposits, people's savings, into loans for the development of business, and instead get heavily involved in speculative activities, then problems are created in the markets," Stournaras summed up.
"The economic crisis has irrevocably challenged orthodox thinking on the relationship between states and markets and national and global distributions of power," David Miliband, another pseudo-socialist sums it up.
Merkel won a pyrrhic victory in Brussels. "If the euro fails, Europe fails," the devout Pan-European champion declared. Devil, no matter, documented in the detail will inevitably expose the failings of the finance ministers of the EU.
"We are facing destruction. Our country has become ripe for burning. The centre of Athens is in flames," MP Costis Hatzisakis thundered. Greek's $130 billion worth of debt means that the economic prospects of the benefactors and the Greek economic elite, in contrast to their downtrodden compatriots, are rosy.
"No one opposes unity. And, no one opposes a strong, more unified Europe. What people oppose is policy, policies that slash workers' wages, privatises state assets, increases unemployment, and prolongs recession. That's what people oppose," according to the pseudonymous Delusional Economics at the blog nakedcapitalism.com.
The Cretan labyrinth was the lair of the barbarous beast. So Greece has become the den of the capitalist miscreant. "The factor the crisis countries have in common is that, without exception, they ran the largest current account deficits in the euro-zone during the period 2000-07. The relationship between budget deficits and crisis is much weaker," Delusional Economics comments.
"It is useful to re-evaluate macros-economic history of peripheral Europe in light of this interpretation. Rather than large current account deficits being the result of fiscal mismanagement or excessive consumption, the current account deficits were the necessary and unavoidable counterpart to the surge in capital flows from the euro-zone core," noted Mike Whitney, author of What really caused the Euro-Zone Crisis? Whitney's analytical piece was widely circulated on The Streetlight Blog. Political convenience, most observers concur, should not be mistaken for good economic and financial policy.
"EU leaders have forced debt-stricken countries in the south to undergo internal devaluation and endless rounds of debt deflation to meet their budget targets. The belt-tightening has shrunk government revenues, increased the deficits and ignited widespread social unrest," Whitney expounds.
In Greek mythology, the creature with the head of a bull on the body of a man is omnipotent, just like Germany, or rather the Troika it spearheads -- the EU, the European Central Bank (ECB), and the International Monetary Fund (IMF). Germany is busily dividing up Greek state assets. Greece is virtually a German colony. The EU, ECB and IMF, of course with German scrutiny and supervision, appear to be bayoneting the already fallen and mortally wounded Greece. That makes the situation in Greece all the more unpredictable.
German Chancellor Merkel does not appreciate the merits of permitting Greece to go bankrupt. Germany has suggested that the EU assume full control of Greek finances. Berlin has even suggested that the Greek elections ought to be postponed indefinitely and that Germany run the country using Greek technocrats trained and directed by Germany. One should not exaggerate, though. Germany itself is divided over how to handle Greece, its debt and its financial crisis. "None of this has anything to do with helping Greece. It is just corporate pillaging gone haywire," Whitney, author of Hopeless: Barack Obama and the Politics of Illusion poignantly points out.
The Minotaur, the infamina di Crete (The Infamy of Crete) in Dante's Inferno is a figure from Pandemonium. And, the Greek capital Athens itself now appears to be on fire with protesters threatening to turn Athens into ashes. Greek banner-waving demonstrators staged rallies in the country's major cities, including Athens and Thessaloniki, Greece's second largest city. "Greece will have to prove that it has reached various benchmarks before it receives any of the money allotted in the bail-out," Whitney concludes.
"One reason for the mess Greece has become lies in its recent history. After a ferocious civil war between Communists and their enemies, beginning in 1946, the victorious right was wholly dominant up to the fall of the colonels in 1974," noted Patrick Cockburn author of Muqtada: Muqtada Al-Sadr, the Shia Revival and the Struggle for Iraq. "Greece never enjoyed the sort of post-war social compromise seen in the rest of Europe, where liberal capitalism was balanced by commitments to workers' rights, social spending and the welfare state," Cockburn so insightfully observed in "Greece Throws in the Towel, Bows to the German Jackboot".
"The Troika -- the EU, ECB and IMF -- need to reduce the level of Greek debt to a sustainable 120 per cent of GDP by 2020. The bond deal and the latest budget cuts are designed to achieve this, paving the way for a second financing package for Greece to enable Greece to repay a 14.5 billion euro bond on 20 March. Deterioration in Greece's finances requires bigger write downs and greater budget cuts," warned Satyajit Das derivatives expert and author of Extreme Money: The Masters of the Universe and the Cult of Risk.
Any agreement is likely to face legal challenges from lenders, which would complicate proceedings," Das stressed. "It is unlikely that Greece will be able to return to financial markets for a long time," he ominously warned. "A similar pattern is already evident in Portugal, Spain and Italy with debt, budget and growth targets, largely unrealistic, being missed. Popular resistance to reforms and austerity is also predictably rising."
To update the Roman poet Ovid's description of the Minotaur, the beast in the maze is part mammon, part bull...