by Diana Johnstone
March 4, 2010
Diana Johnstone is author of Fools’ Crusade: Yugoslavia, NATO and Western
Delusions (Monthly Review Press). She can be reached at email@example.com
For Europe’s poorest countries, European Union membership has long held out
the promise of tranquil prosperity. The current Greek financial crisis ought
to dispel some of their illusions.
There are two strikingly significant levels to the current crisis. While
primarily economic, the European Economic Community also claims to be a
community, based on solidarity - the sisterhood of nations and brotherhood
However, the economic deficit is nothing compared to the human
deficit it exposes.
To put it simply, the Greek crisis shows what happens when a weak member of
this Union is in trouble. It is the same as what happens on the world scale,
where there is no such morally pretentious union perpetually congratulating
itself on its devotion to human rights.
The economically strong protect
their own interests at the expense of the economically weak.
The crisis broke last autumn after George Papandreou’s PASOK party won
elections, took office and discovered that the cupboard was bare.
government had cheated to get into the EU’s Euro zone in 2001 by cooking the
books to cover deficits that would have disqualified it from membership in
the common currency. The European Treaties capped the acceptable budget
deficit at 3 per cent and public debt at 60 per cent of GDP respectively.
fact, this limit is being widely transgressed, quite openly by France.
major scandal arrived with revelations that Greece’s budget deficit reached
12.7 per cent in 2009, with a gross debt forecast for 2010 amounting to 125
per cent of GDP.
Of course, European leaders got together to declare solidarity. But their
speeches were designed not so much to reassure the increasingly angry and
desperate Greek people as to soothe “the markets” – the real hidden almighty
gods of the European Union. The markets, like the ancient gods, have a great
old time tormenting mere mortals in trouble, so their response to the Greek
problem was naturally to rush to profit from it.
For instance, when Greece
is obliged to issue new bonds this year, the markets can blithely demand
that Greece double its interest rates, on grounds of increased “risk” that
Greece won’t pay, thus making it that much harder for Greece to pay. Such is
the logic of the free market.
What the EU leaders meant by “solidarity” in their appeal to the gods was
not that they were going to pour public money into Greece, as they poured it
into their troubled banks, but that they intended to squeeze the money owed
the banks out of the Greek people.
The squeezing is to take the forms made familiar over the past disastrous
decades by the
International Monetary Fund: the Greek state is enjoined to
cut public expenses, which means firing public employees, cutting their
overall earnings, delaying retirement, economizing on health care, raising
taxes, and incidentally probably raising the jobless rate from 9.6 per cent
to around 16 per cent, all with the glorious aim of bringing the deficit
down to 8.7 per cent this year and thus appeasing the invisible gods of the
This just might propitiate both the gods and German leaders, who above all
want to maintain the value of the Euro. The financial markets will no doubt
grab their pound of flesh in the form of increased interest rates, while the
Greeks are bled by IMF-style “shock treatment”.
And what about that great theater of human rights and universal brotherhood,
the European Parliament?
In that forum everyone gets to speak for a
carefully clocked 1, 2, or 3 minutes, but when it comes to the most serious
matter, the budget, the authoritative voices are all German.
Thus the chairman of the EP’s special committee on the economic and
financial crisis, Wolf Klinz, has called for sending a “high representative”
of the EU to Greece, an “economies commissar” to make sure the Greeks carry
out the austerity measures properly.
The Greek crisis can allow the EU to
put into practice for the first time its “Treaty instruments” concerning
“supervision of budgetary and economic policy”.
Interest rates may go up
because of “risk”, but there is to be no risk. The pound of flesh will be
There was no such supervision of the financial fiddling which caused this
mess. The EU statistics agency
Eurostat recently discovered and revealed
that in 2001, Goldman Sachs secretly (“but legally”, protest its executive
officers) helped the right-wing Greek government meet EU membership criteria
by using a complicated “currency swap” that masked the extent of public
deficit and national debt. [See
Andrew Cockburn and
Who understands how that worked?
I think it is fair to guess
that not even Angela Merkel, who is trained as a scientist, understands
clearly what went on, much less the incompetent Greek politicians who
accepted the Goldman Sachs trickery. It allowed them to create an illusion
of success – for a while.
Success meant being a “member of the club” of the
rich, and it can be argued that this notion of success has actually favored
bad government at the national level. Belonging to the EU gave a false sense
of security that contributed to the irresponsibility of incompetent
Having euros to buy imported goods (notably from Germany) pleased rich
consumers, while the Euro priced Greek goods out of their previous markets.
Now the debt trap is closing. The traditional way out for Greece would be to
leave the Euro and return to a devaluated drachma, in order to cut imports
and favor exports.
This way, the burden of necessary sacrifices would not be
borne solely by the working class. But the embrace of EU “solidarity” is
there to prevent this from happening. German authorities are preparing to
lay down the law to the Greeks, after reducing the income of their own
working class in order to benefit Germany’s export-oriented economy.
Austerity measures are the opposite of what is needed in a time of looming
depression. Rather, what is needed are Keynesian measures to stimulate
employment and strengthen the domestic market. But Germany is firmly
attached to the export model, for itself and everyone else
(“globalization”). For a country like Greece, which cannot compete
successfully within the EU, exports outside the EU are crippled by its use
of a strong currency, the Euro.
Bound to the Euro, Greece can neither
stimulate its domestic market nor export successfully. But it is not going
to be allowed to extricate itself from the debt trap and return to its
traditional currency, the drachma. Poverty appears to be the only solution.
There is discontent within the German working class at their country’s
policies aimed at shrinking wages and social benefits for the sake of
selling abroad. In an ideal “social Europe”, workers in Germany would come
to the aid of workers in Greece by demanding a radical revision of economic
policy, away from catering to the international financial markets toward
building a solid social democracy. The reality is quite different.
The Greek financial crisis exposes the absence of any real community spirit
in the EU. The “solidarity” declared by the country’s EU partners is a
solidarity with their own investments. There is no popular solidarity
The EU has established a surrogate ideology of
internationalism: rejection of the nation-state as source of all evil, a
pompous pride in “Europe” as the center of human rights, giver of moral
lessons to the world, which happens to fit in perfectly with its
subservience to United States imperial foreign policy in the Middle East and
The paradox is that European unification has coincided with
decreasing curiosity in the larger EU states about what happens to their
Despite a certain amount of specialized training needed to create a Eurocrat
class, the general population of each EU member is only superficially
acquainted with the others. They see them as teams in soccer matches. They
go on holiday around the Mediterranean, but this mostly involves meeting
fellow tourists, and study of foreign languages has declined, except for
English (omnipresent, if mangled).
Mass media news reports are turned
inward, featuring missing children and pedophiles ahead of even major
political events in other EU member states.
Northern European media portray Greece practically as a Third World country,
peripheral and picturesque, where people speak an impossible language, dance
in circles on islands, and live beyond their means in their carefree way.
The crickets in the Aesop fable, scorned by the assiduous ants.
Media in Germany and the Netherlands imply that IMF-style shock treatment is
almost too good for them. The widening polarization between rich and poor,
between and within EU member states, is taken for granted.
The smaller indebted countries within the EU are amiably designated by the
English-speaking financial priesthood as the PIGS,
...an appropriate designation for an animal farm
where some are so much more equal than others.