Deescalating Europe’s Politics of Resentment

by Yanis Varoufakis, Greece’s finance minister.
MAR 25, 2015 55 originally published at http://www.project-syndicate.org

ATHENS – A German television presenter recently broadcast an edited video of me, before I was Greece’s finance minister, giving his country the middle-finger salute. The fallout has shown the potential impact of an alleged gesture, especially in troubled times. Indeed, the kerfuffle sparked by the broadcast would not have happened before the 2008 financial crisis, which exposed the flaws in Europe’s monetary union and turned proud countries against one another.
When, in early 2010, Greece’s government could no longer service its debts to French, German, and Greek banks, I campaigned against its quest for an enormous new loan from Europe’s taxpayers to pay off those debts. I gave three reasons.

First, the new loans did not represent a bailout for Greece so much as a cynical transfer of private losses from the banks’ books onto the shoulders of Greece’s most vulnerable citizens. How many of Europe’s taxpayers, who have footed the bill for these loans, know that more than 90% of the €240 billion ($260 billion) that Greece borrowed went to financial institutions, not to the Greek state or its people?
Second, it was obvious that if Greece already could not repay its existing loans, the austerity conditions on which the “bailouts” were premised would crush Greek nominal incomes, making the national debt even less sustainable. When Greeks could no longer make payments on their mountainous debts, German and other European taxpayers would have to step in again. (Wealthy Greeks, of course, had already shifted their deposits to financial centers like Frankfurt and London.)
Finally, misleading peoples and parliaments by presenting a bank bailout as an act of “solidarity,” while failing to help ordinary Greeks – indeed, setting them up to place an even heavier burden on Germans – was destined to undermine cohesion within the eurozone. Germans turned against Greeks; Greeks turned against Germans; and, as more countries have faced fiscal hardship, Europe has turned against itself.
The fact is that Greece had no right to borrow from German – or any other European – taxpayers at a time when its public debt was unsustainable. Before Greece took any loans, it should have initiated debt restructuring and undergone a partial default on debt owed to its private-sector creditors. But this “radical” argument was largely ignored at the time.
Similarly, European citizens should have demanded that their governments refuse even to consider transferring private losses to them. But they failed to do so, and the transfer was effected soon after.
The result was the largest taxpayer-backed loan in history, provided on the condition that Greece pursue such strict austerity that its citizens have lost one-quarter of their incomes, making it impossible to repay private or public debts. The ensuing – and ongoing – humanitarian crisis has been tragic.
Five years after the first bailout was issued, Greece remains in crisis. Animosity among Europeans is at an all-time high, with Greeks and Germans, in particular, having descended to the point of moral grandstanding, mutual finger-pointing, and open antagonism.
This toxic blame game benefits only Europe’s enemies. It has to stop. Only then can Greece – with the support of its European partners, who share an interest in its economic recovery – focus on implementing effective reforms and growth-enhancing policies. This is essential to placing Greece, finally, in a position to repay its debts and fulfill its obligations to its citizens.
In practical terms, the February 20 Eurogroup agreement, which provided a four-month extension for loan repayments, offers an important opportunity for progress. As Greece’s leaders urged at an informal meeting in Brussels last week, it should be implemented immediately.
In the longer term, European leaders must work together to redesign the monetary union so that it supports shared prosperity, rather than fueling mutual resentment. This is a daunting task. But, with a strong sense of purpose, a united approach, and perhaps a positive gesture or two, it can be accomplished.
This is an updated and extended version of a post at yanisvaroufakis.eu.

Read more at http://www.project-syndicate.org/commentary/greek-bailout-restructuring-by-yanis-varoufakis-2015-03#kJ2puzcGFXORWJml.99

One response to “Deescalating Europe’s Politics of Resentment

  1. Germans living part time in Greece with holiday homes have many times apologised for what German politicians are doing to Greece and the Greeks.

    German tourists have no problem coming to Greece, nor will Greeks think that individual German people are to blame for what Merkel has imposed.

    There are foodbanks in Germany.

    A lot of Greeks have given up trying to find work in Greece where capitalism has all but been destroyed by the EU, and have gone to work in Germany, because they can speak good German and integrate into the local culture well.

    SYRIZA wanted to get rid of the Enfia for the bulk of people, but seems to be back-tracking on that promise, because of the EU / Merkel’s opposition.

    Rents are a citizen income to people with little or no other income and no welfare state in Greece. This is not comprehended by other European nations about Greece.

    The EU imposed multiple layers of taxes on increasingly cashless and homeless Greeks, with the sole nation with a nil basic tax allowance.

    Enfia appears to be on every Euro, with no basic tax allowance on rent income?

    Cutting wages both public and private, when imposing taxes on every Euro, gave me this scene heard when awoken from afternoon siesta (OK I’m old) on holiday in Athens.

    Live in / married (?) husband returns from work. Looks to add to the savings pot. Finds it empty. Hey where’s that money. Oh the household money. No, it was to pay a tax. Oh I’ve bought your favourite dinner, beef with the money, I thought it was the household budget.

    Then the husband went into meltdown, screaming in panic rage for the longest time, with a wife trying to calm him down, saying it was his favourite dinner. How was she to know?

    Then they had siesta mercifully.

    Til 6pm, when I was awoken so could go out and find something cheap but good Greek dinner (how I miss that now can’t afford to visit Greece as done over a lifetime each summer as the UK government has morally stolen my state pension) and the argument revved up again.

    Til the wife said, I’ve had enough I’m leaving you.

    Husband, Go on then, goodbye.

    Divorce over a beef dinner.

    I bet that is happening even today, even with SYRIZA, as the EU demands capitalism is crushed into the dust in Greece, and the pillaging of the EU / IMF of Greece goes on unabated.

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