18.09.2016 Author: Seth Ferris

The EU Versus Greece: A Staring Match the EU Cannot Win

45342423423Most political disputes are not about the things the parties involved claim they are about. The recent wars in Middle Eastern countries, in which control of energy resources were a geopolitical issue before the current crop of “repressive dictators” were born, illustrate this point very well.

The long-running dispute between the EU and Greece, ostensibly over the terms of EU financial assistance to prevent Greek bankruptcy, was never really about whether Greece could, or should, pay its debts. It was about whether the EU could admit it might be wrong, and wasn’t the cure for all ills its founding rhetoric, ongoing expansion and maintenance of all its existing members suggested it should be.

Now it is no longer even about that. It is simply a staring match – the EU is facing Greece and other recalcitrant members down, and Greece is facing the EU and its own struggling population down. The winner will be whoever makes the other blink first.

What the two sides are arguing about is irrelevant: the trial of strength itself is all that now matters. Too much credibility is at stake for either side to do anything else but hope the other suffers total humiliation.

How has it come to this? Those who remember the Soviet Union might be able to tell you. Theoretically, the side with the greatest resources should always win such a contest. But if it gets to the point where every action you take is driven by nothing more than fear of defeat, that defeat is inevitable. The EU would rather die than admit that, but either admitting it or rapidly dying may soon be the only choices the terminally ill EU has.

Naughty boys and dunce’s caps

The EU is insisting on punishing Greece for its “irresponsibility” in much the same way that France insisted on punishing Germany after the First World War. Germany could not pay the reparations demanded, and its default on them was genuine. France would not get its compensation by occupying the Ruhr in retaliation, the action it took to do so. But they were so afraid of the weakness of their own state, the deeply divided “Third Republic”, that taking a stand for the sake of it was all they could do to demonstrate their own legitimacy, regardless of the consequences.

Similarly, the Soviet Union signed its death warrant by invading Afghanistan in 1979. Afghanistan’s Communist government was increasingly independent of Moscow because the Communists were the party of modernity, not a Soviet Union fan club. By then the Soviets only believed in Communism because it made then a great power. The invasion of Afghanistan was the first sign that the Soviet Union was afraid of its own weakness, and would eventually collapse from within.

This is why the EU insists on taking a “tough line” with Greece. It is insisting on certain policies, the same ones which caused the global financial crisis, because its leaders have been educated to believe they should. They are about the credibility of those leaders, not any sound economic argument.

Those leaders, with their armies of economic advisors, are not unaware of this. As Frances Coppola recently pointed out, “No way can a fiscal tightening of 3% of GDP, plus a further tightening of 2% when (not if) Greece misses its fiscal targets, do anything but further economic damage. There is no monetary offset to soften the blow, since Greece is excluded from the ECB’s QE {quantitative easing]. A fiscal tightening of this magnitude without central bank support is the equivalent of doing major surgery without anesthetic. The patient may survive the surgery, but the pain and shock will set back its recovery by years.”

Nevertheless, the economics of austerity, spending control and balanced budgets have to be assumed to be right, despite the damage they have done in many countries – ask the whole of South America. Not because there is any economic basis for them now, but because economic education is notoriously intolerant.

In most academic areas a range of opinions and approaches are tolerated, provided arguments can be constructed in an intellectually sound way. Some who study politics at the most notoriously left-wing universities still graduate with consistently right-wing views, and then find work in the field, provided they can argue their case cogently.

Not so in economics. The essential weakness of the discipline is manifest in aggressive attempts to brand it a “science”. This has led to the proponents of each idea believing that only they think correctly, and conducting palace revolutions against those who think differently.

The intellectually popular policies of today have been imposed on those who promote them, who can’t work in their chosen field unless they accept them. Would any EU politician admit to being totalitarian, or the slave of other totalitarians? Of course not – which is why they demand that everyone accepts that their policies work, at sword point, in complete contradiction of everything they are supposed to believe in.

As former Greek Finance Minister Yanis Varoufakis put it, “A clueless political personnel, in denial of the systemic nature of the crisis, is pursuing policies akin to carpet-bombing the economy of proud European nations in order to save them.”

Non-Greeks bearing gifts

The Greek government is doing the same for a different reason. It was elected on a platform of rejecting the EU-imposed austerity and relieving the misery of the people. Left to itself, it might have been able to keep those promises. But up against the desperate EU economists, the only thing it has been able to deliver is more austerity than its predecessors did.

If the Greek government wants to give itself a chance of achieving anything it must stay in power, and that means accepting ever more onerous terms. But at the same time it has to deal with the public it has betrayed, according to its own logic. So it likewise has to pretend that the policies inflicted on it are the only rational alternative, and only exist for that reason: the principles of the governing Syriza party must be unchanged, and the public have to be stared at until they believe this.

With Turkey growing ever more powerful and independent, and still seen as a threat to Greece’s interests, the Greek population will clutch at any straw. But if this is what both the EU and Greece have come too, neither can expect to last very long, as the founding logic of both Greece and the EU is that they must, by definition, have something more to offer.

The Bratislava EU summit has seen Angela Merkel, of all people, acknowledge that the EU is in a “critical situation”. This comment was supposed to be a response to Brexit, the first occasion on which a country has voted to leave the EU. However she then stated that the way to resolve this crisis was to “show we could do more on security, defence co-operation and the economy”.

These are the very “joint policy” issues the EU has been promoting for a long time, regardless of what its members think about them. It is the perceived erosion of sovereignty the EU’s policies entail which alienated many UK referendum voters. But it seems Merkel does not want to change the record because the EU doesn’t know what it can offer without such projects, so must continue with them for the sake of it.

Similarly Greece is not likely to find any way forward because it is afraid of its own divisions. Last year it made a point of cosying up to Russia and China, which had the resources to give it the bank loans it would need when the latest EU bailout extension ran out. This prompted the EU into some action at the time, but is not a policy Greece can continue following for very long.

Greece is still haunted by its civil war of the 1940s, when it just managed to resist falling into Communist hands, unlike all the countries it borders. Every Greek villager, whatever their position on that conflict, can point out places in his locality where significant civil war actions took place, in much the same way that everyone in northern France can show you a church or public building sacked by the English during the Hundred Years War.

The present Greek state is built on not going the same way as Russia and China. Even now, going cap in hand to those countries strikes at the foundations of modern Greek statehood. With 500 years of Ottoman rule still a significant part of the country’s identity, no one is going to do that for long. Greece can only defend its own existence by maintaining its historic position for the sake of it, so even a Syriza government will continue to rely on simply staring everyone down.

David still beats Goliath

But it is Greece which is actually more likely to win this staring contest, its desperate economic state notwithstanding. It needs international support and markets. But the EU has much more to lose than Greece has from a Greek exit, because it needs Greece to justify its own actions more than it cares to admit.

When Greece joined the EU in 1981 it cemented its position as the bulwark of Western influence in Eastern Europe, and so did the EU itself. It also gained protection for its civilian government, which had not long displaced a military regime.

Now there are many Western-oriented democracies in the region. Greece doesn’t need the EU to protect its political class. If it does leave, having been given no other way out of debt, it is well placed to take all its neighbours with it – particularly now they can join the UK in any new configuration.

If Greece leaves the EU it will need further help, and quickly. Its neighbours, who are equally disgruntled with the EU, can provide that – their economies can neither swamp it nor drain it, both actions by which richer EU members have damaged poorer ones. But they can only do that if they leave the EU too: and if Greece takes the plunge with a believable reason behind it, there is every possibility they will.

The EU cannot contemplate a retreat from its Eastern expansion, as this implies that “European values” are only held in Western Europe, which imposed them on everyone else. But the concept of a separate Orthodox Christian civilization, though ignored in the West, is accepted in Greece and its immediate EU neighbours. This is why Carl Bildt, the small dog with the outsized yap, has made speeches saying that “Orthodoxy is the enemy”. It is not the values of Orthodoxy which are a threat, but the fact that people believe in them, and more than those of the EU.

Germany’s unsustainable long-term debt was written off in 1953. Greece’s present day debt was largely created by Germany’s destruction of Greek infrastructure during World War Two and Germany’s bankers imposing unsuitable policies on it as a price of EU membership. So Greece won’t be lectured on European values by Germany, a much younger state, when it can now unite with its neighbours on the basis of values it prefers, and has always believed in.

Blink or you’ll miss it

Any EU blink will not be public. It will ultimately impose measures which help Greece, but insist these are natural extensions of the ones which have done so much harm. But the big question is the timing. The opportunity to get away with this may be as small as one official meeting.

If the EU waits too long, it will lose Greece and ultimately have to admit it has lost itself. It will also find that Greece will never go bankrupt as long as it offers politicians nice holidays. The EU can do that too, but more is expected of it, and its reliance on a staring match shows it can’t deliver much more.

If the EU is determined never to reschedule Greece’s debts it will eventually lose far more political capital with its own public than it could gain from repayment. Two thousand years after the Western Empire destroyed Greek civilization, the boot may now be on the other foot.

Seth Ferris, investigative journalist and political scientist, expert on Middle Eastern affairs, exclusively for the online magazine “New Eastern Outlook”.