The Fourth Great Crisis: Greece in the Summer of 2016

From Omonia Square, three main streets lead to the center of Athens in Syntagma: Stadiou, Panepistemiou, and Akademias. They have been for many decades the commercial heart of the city.

From Omonia Square, three main streets lead to the center of Athens in Syntagma: Stadiou, Panepistemiou, and Akademias. They have been for many decades the commercial heart of the city. Walking up Stadiou this summer, there was a pictorial display of the street in the 1920s and 1930s. It was open and vibrant. Gentlemen walked by in hats and with canes, and women in bustles and bodices. There was motor traffic. People out and about their business and pleasure, it was a recognizable thoroughfare in a European capital.

If someone had chosen to mock the Greece of 2016 as deliberately as possible—I think the display was a bank’s—nothing could have hit the bull’s-eye better. The Stadiou I walked was a cemetery of closed shops and graffiti-scrawled walls, with an occasional clothing store struggling among the ruins and a few predatory banks, their jaws agape for phantom prey. There was virtually no traffic, and for block after block I was the only pedestrian.

Panepistemiou featured something different: beggars lying on their sides, drugged or asleep, with a paper cup tilted a few inches off the ground at a 45 degree angle, more as if to catch drippings than anything that might be deposited. It wasn’t begging, I decided, but a kind of performance art: the image of a country too exhausted even to beg.

Greece is enduring its fourth great crisis of the past hundred years. At this point, it figures to be its most protracted, and its consequences may yet prove the most prolonged.

The first crisis was the Smyrna catastrophe of 1922, when an ambitious politician with dreams of reestablishing a Greek political presence in Asia Minor—the “Great Idea”—overreached himself and caused a demographic disaster. A thriving Greek community was expelled from its ancestral home, and a Turkish one compelled to leave Thrace. Millions of lives were uprooted on both sides. Constantinople, the Byzantine capital of Hellenism, died its final death as a center of Greek culture. Fifty years later, the trauma was revisited in the division of Cyprus.

The second crisis was that of World War II and the civil war that was its aftermath. What began as a heroic defense of Greek soil ended with Greeks fratricidally turned on one another, and Great Power politics cynically calling the turn. Here, too, the wounds were deep and long-lived.

The third crisis was that of the Junta, the seven-year tyranny that grew, too, out of Cold War politics. Having written their chapter of shame, the colonels were quickly scuttled when they provoked another crisis with Turkey.

For forty years, Greece enjoyed relative stability under a restored democracy. Two established political dynasties alternated in power under parties organized by their leaders, with smaller fringe groups tolerated on the margin. The state-run media carefully scripted the news, and defined the acceptable range of issues and discussion. A traditional clientelist system distributed political favors; this was criticized for contributing to a notoriously bloated and inefficient bureaucracy, but it did have the effect of giving a fairly broad spectrum of Greeks a buy into the system, with the promise of reward for loyalty. Corruption was understood to be entrenched in, indeed structural to it. But elections were regular and peaceful, and governments turned over power to their successors without demur. If from the standpoint of a Scandinavian social democracy it was a crude method of delivering public services, for a capital-poor country dependent on tourism and remittances and with no tradition of nonpartisan administration, it was—within limits—not the worst of solutions.

At the same time, it must be noted that large and small nations are not created equal, and that “sovereignty” is a far more conditional affair for the latter. Modern Greece came into existence under terms dictated by the great powers of the time; it subsisted, politically and financially, under the systems run by them; it was swept up in the crises created by them. For a long time it was a British client, and the Smyrna disaster was largely the result of a fatal miscalculation about how far Britain would back a postwar adventure by a minor ally. The British handed off Greece to the United States in 1947, and for the next forty years Greece was the eastern anchor of the American Sixth Fleet. The Junta was abetted if not instigated by Washington, a regime of colonels (not even generals), as if to remind an errant client of its place in the pecking order. The colonels were in turn briskly dispatched when they precipitated a crisis with a more critical American ally, Ankara.

To understand the Fourth Crisis, one must look at the next handoff of Great Power interest, which occurred with fall of the Soviet Union. With no Superpower in Eastern Europe to contend with, a strategic void appeared in the Balkans and the Eastern Mediterranean. That void was entered, if not filled, by two hitherto cautious powers, Germany and the Vatican. The Germans, seeing an open field of spoils, encouraged nationalist uprisings in Slovakia and Croatia, two former World War II allies refederated with Yugoslavia after the war. Pope John Paul II was also active in currying favor with these Catholic insurgents, seeing a ripe harvest of souls in the formerly subjugated populations of the East.

Yugoslavia’s territorial integrity and survival had been a critical point of American policy since Marshal Tito’s bolt from the Soviet Bloc in 1948, but with the USSR’s demise its value as a Cold War asset had abruptly vanished for Washington. The result, as unanticipated as Moscow’s own collapse, was the breakup of the Yugoslav Federation in bloody civil war. Meanwhile, a reunified Germany—reunified without terms or conditions—moved swiftly to exploit the region as a whole. Thus was revived the frankly expansionist Drang nach Osten—the old “drive to the East” of Wilhelmine Germany—in the suddenly favoring circumstances of a post-Cold War world.

That world caught virtually all observers by surprise, but the Germans almost instinctively reacted to a European checkerboard that was theirs to play. The currency of their power was no longer the threat or reality of military force, but a daring financial coup that, sprung on the still-developing European Union with little substantive debate, put Germany in a firmly hegemonic position. This was the adoption of the euro, which promised to further European economic integration and promote a common citizenship.  Just as the U.S. Federal Reserve system regulates the American economy by determining the amount and availability of the money supply, so too the euro would, through central bank institutions that performed a similar function, create a European-wide economy with common policies and firm controls.

There were two observations to be made about the adoption and implementation of the euro. First, the analogy between the American system and the proposed European one was seriously flawed. The American Federal Reserve is, at least notionally, a system independent of direct political pressure, but its director is nominated and approved by politically responsible actors who answer to a general electorate, and who in practice coordinates policy closely with the Treasury Department. No such democratic controls would exist as a check on the proposed European system, and, while each member state would be individually responsible for its own economic performance, including mandates and targets imposed on it from without, it would lack the primary instrument for regulating its affairs, namely a national currency under its control.

Secondly, although not every European Union member chose to adopt the euro, Britain being the most conspicuous exception, the implication of a common currency was a common, Continent-wide polity as well. This meant incorporating the former Soviet bloc, an ethnically and historically distinct region that had been for centuries underdeveloped relative to Western Europe, and for the previous forty years largely shut off from contact with it. The culture shock that West and East Germans experienced upon reunification, despite a common language and customs, showed how daunting a task Continental integration would be. For skeptics, though, the response was to ask what the alternative was. Capitalist development was clearly coming to Eastern Europe after the Soviet interlude; that development could be orderly and within the context of the kind of social democracy the EU hoped to make normative throughout Europe, or chaotic, divisive, and destabilizing. The latter would be a threat not only to European economic but political security, particularly if it invited a return of Russian interests. The temporary retreat of those interests caused by Russia’s virtual socioeconomic collapse in the early 1990s was a brief window of opportunity; that opportunity could not be lost.

The term then fashionable to project an optimistic future for the European experiment was convergence, the notion that a union between wealthy and less wealthy actors would raise the living standard of the latter. On such a notion, a country such as Greece would inevitably benefit by economic association with one such as Germany. Clearly, this model would prove flawed.

Convergence had a more general significance for those who surveyed the landscape of the post-Cold War world, particularly in Washington and Berlin. No more favorable opportunity to reshape Europe in accord with German interests could have been imagined. The newly liberated Soviet satellites hungered for Western prosperity, and for security from a Russia still deeply feared. The fact that East Germany, too, had shared the fate of Communist domination eased memories of wartime Nazi occupation for some (and much of Eastern Europe had, of course, been allied to the Nazis). The moment of liberation itself as well—the fall of the Berlin Wall—had been the triumph of postwar Germany itself, and the celebratory performance of Beethoven’s Ninth Symphony shortly after by the world’s most famous Jewish musician, Leonard Bernstein, in the shadow of the Brandenburg Gate crowned the moment. Germany, now fully rehabilitated as the model citizen of the new Europe, was situated as never before to lead it into its bright, peaceful, and prosperous future, uniting East and West as it itself had just been united. Symbol and circumstance could not have converged more happily to vindicate Germany’s new role, and to banish the ghosts of the past. It was at this point that, with the advantage of the moment, Germany pressed forward with the euro. In the general euphoria, there was little inclination, at least on the Continent, to question the implications of giving effective control of Europe’s future to a Germany that, when last united, had brutally conquered it.

Any lingering unease about a single-currency economy was pacified by the commitment, quickly voiced by the George H. W. Bush administration, that the United States would continue to guarantee European security—that is, remove the need for any independent European defense and therefore the potential specter of a revived German militarism. The European Union had grown up since the 1950s under the umbrella of NATO; these two institutions would continue to march together. American friendship was not disinterested; Washington was worried about a post-Cold War Europe that, too successfully integrated, could become a not entirely friendly competitor to the dollar. NATO would be its finger on the pulse, as well as everyone’s guarantee against a revived Russia. As in 1947, when U.S. Marshall Plan aid stopped at Moscow’s door, Russia was redefined as outside the European community. As at the end of World War II, a flurry of hastily considered decisions was thus made between 1989 and 1992 that would shape the geopolitical future of the European continent. The adoption of the euro—a European choice—and the reflagging of NATO, an essentially American one, were the two most critical. Both, as it turned out, went hand in hand. They sealed, too, the American-German condominium in Europe that had been the basis of Washington’s policy since NATO’s founding in 1949. Germany’s role in this partnership was to serve as the economic engine of a “free” Europe, while America’s was to be its protective shield. In the post-Cold War world, the European Union’s colonization of the former Soviet satellites of Eastern Europe would be both sponsored and overseen by American military might. German and American interests were thus to be tied more firmly than ever before, and on a wider stage.

It is in this context that the EU’s extension into Eastern Europe, in tandem with that of NATO, must be seen. It is also the context in which the entire EU project, including the crisis into which it has been plunged since the systemic financial meltdown of 2008, shows its true colors. Only in this way, too, does the Greek crisis itself fully emerge, both in its nature and in the options that it now presents.

Economic convergence between the more prosperous northern members of the EU and its less prosperous southern ones was to have been achieved through a combination of loans, grants, and investments. In practice, these monies were essentially utilized to purchase stakes in the southern economies for exploitation by major sovereign, corporate and banking players—in Greece, the German giant Siemens was the most visible presence—very much in the manner of so-called development projects between First and Third World countries generally. Lavish bribes insured the cooperation of local officials and elites for sweetheart deals. Europe’s southern tier economies were soon awash in capital and cheap credit in a seemingly secure currency, and a consumer boom fueled by this gave a broad illusion of shared prosperity.

There is no need to rehearse the events of the past eight years, in Greece or Europe as a whole. It suffices only to say what the general result has been for those affected by Germany’s hegemony over the Continent. Acting as its Scrooge-like creditor instead of us as a major culpable participant in the financial collapse, it has ensured its own solvency at the cost of basic living standards for tens of millions of those at the mercy of its functionaries in Brussels, and capitalized on its position to loot the treasuries and assets of its victims, thus wrapping its tentacles around their economies, not to say their patrimonies, into the far future. Nor was this the result of any economic exigency. Although most Western countries reacted to the crisis with austerity programs of one degree or another—a measure of how far their own economic elites dictated policy at the expense of the general population—these were combined in most cases with stimulus funding designed to stop the bleeding at critical points, for example in the U.S. where Washington stepped in to ensure the cash balance of state governments. This was not Keynesianism, but the kind of emergency support in the face of public bankruptcy extended even by Herbert Hoover during the Great Depression in America.

No such courtesies were extended by the European Union to its member states. When the crunch came, its more vulnerable members were treated exactly as predatory international creditors treated Third World countries bankrupted by collapsing commodity prices. The “Union,” in short, was a fiction of the false prosperity of a few years of loose cash chasing easy credit. When the reckoning came, all pretense of a common project fell away. What remained was the naked interest of a single hegemonic power. What was revealed was the true nature of Europe’s association, and its officially unbestowed but only proper designation: the Fourth Reich.

That is where matters stand. Europe as a whole remains embedded in depression. In Greece, which has been functionally bankrupt since 2010, staggering levels of unemployment have driven half a million economic refugees abroad, the best and brightest of a generation whose departure has drained the country of its future: a social, economic, political, cultural, and moral tragedy of incalculable dimensions. Make no mistake: these losses will not be made good; these refugees will not return, no matter what their sentimental attachment to the motherland. And many of them have been welcomed to Germany, where their skills are serviceable, their youth is needed, and their talents will benefit the Reich. Perhaps, like the pleasant gentleman I met this summer who retired after a long career in Hamburg, they’ll come home in retirement to enjoy the language and climate of their youth. Meanwhile, those trapped in situations or responsibilities they can’t leave, will suffer the death of a thousand cuts that is the lot of those who remain.

Yet further rounds of austerity were imposed in Greece this spring at German command; new taxes and further cuts impend. The climate of the country is one of despair. It is not merely the sense that resistance is futile, that strikes and protests mean nothing but docked wages and lost jobs. It is the realization that Greece, the birthplace of self-government, is without a government itself. Its offices of state are occupied by errand boys who await their orders from Berlin, meanwhile arranging the fire sale of whatever public assets haven’t yet been claimed by the Reich. Alexis Tsipras schemes to change the country’s system of proportional parliamentary representation, as if political parties had meaning and voting had consequences under present circumstances. Meanwhile, he continues to embarrass the country (if not himself) with his hijinks as a junior Pétain. He began his state visit to China earlier this summer, for example, by firing his respected ambassador to Beijing on the day of his trip, and his hosts were obliged to strip off their ties when they discovered him wearing none. Even the Chinese were sartorially stumped, however, when one of his ministers reportedly showed up in a T-shirt. They were pleased enough, though, to buy a majority share in the Port of Piraeus on the cheap. Pericles and Themistocles can’t stop themselves from laughing, but only because they’re crying too hard. Never before has the country been represented, if that’s the word, by such a juvenile incompetent.

Alexis Tsipras isn’t Greece’s problem, however. The problem is the lack of an alternative. While presumably some of them might be less clownish, none of the current political leaders on offer represents anything other than a continuation of the present disaster. The fact of the matter is that Greece is an economic basket case in the process of being transformed into a permanent debt colony. The country may still fly its flag, but that’s the only rag of sovereignty it has left. Whoever answers the telephone will only be carrying out orders from Berlin.

Must it be this way? Is the Greek future that of a servant nation, waiting on the tables of the rich on behalf of a foreign ownership class that will enjoy its sun and its ruins from the terraces of their luxury hotels and villas? I have seen that future already, in the yachts that cruise like a new Persian fleet in the straits between its islands, or the sumptuous homes and developments that dot their cliffs. It will come to pass, too, unless Greece summons the will to reject it.

The problem, as of only a few months ago, is that Greece lacked a credible plan of resistance.   Last year’s Plan B, the scheme for a reconversion to the drachma reportedly drafted for Syriza by the American economist James Galbraith, was never prepared for implementation, and Tsipras’ abject capitulation to his EU masters at the moment of crisis rendered it moot. Having been led toward a moment of unity and hope by Tsipras’ infamous referendum of that summer, the country seemed to have no forward path.

Circumstances have changed. Britain’s decision in June to leave the European Union after forty-one years of membership represents not a momentary populist backlash but a systemic challenge. The EU is failing, and it is increasingly evident that, whatever the costs and uncertainties of dismantling it, it no longer has a worthy purpose to serve. As a superstate, it has been both tyrannical and incompetent; as a fig-leaf for German hegemony it is increasingly transparent. Whether or not it could have developed differently, it can no longer change course, nor undo its own history. It will be challenged piecemeal, partly by passive resistance, and partly by active defiance. This summer, both Spain and Portugal failed to meet mandated economic targets which should have triggered automatic financial penalties; Brussels dared not impose them. What if Greece were to similarly walk back its own commitments, wrested from it only under the most acute duress? What if it were to “accept” the terms suggested by the International Monetary Fund this past spring, suspending its debt payments until 2040? It is inconceivable to me that the EU could react as it did in the crisis of last summer, shutting off credit and bringing the country to the verge of a humanitarian crisis.

The power equation, in short, has profoundly shifted. What is lacking is political leadership and will. It will take time for these to emerge, and they are most unlikely to come from the current cast of characters in Athens. Change does not come from the top, however. The Greeks must see their opportunity, and demand to be represented by those who will seize it. It is easy enough to say this from a distance; it will take a reinvestment by Greeks in their own democracy, and it is understandable that faith in the future will be difficult to muster in a people that has been effectively deprived of one. Nor are the structural tensions and inequities within Greek society, deeply exacerbated by the experience of the past seven years, to be underestimated in what will be a difficult and challenging reconstruction. But the present state of affairs is neither morally tolerable nor—and this is the news—practically unavoidable.

First, though, the clown must go.

About Robert Zaller 91 Articles
Dr. Robert Zaller is an American author, playwright, and professor of history at Drexel University. An authority on British political history and constitutional thought, he writes extensively on politics, modern literature, film, music and art. He has been a Guggenheim fellow and a fellow of the Royal Historical Society.

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