Greece has just scraped together the money to make its latest, $757 million (848 million euro) payment to its European (read: German) debtmasters. It did so, without cash enough in the national coffers, by forcibly draining municipal reserves—a desperate move that leaves local communities all the more vulnerable to crisis. It leaves the country fiscally denuded, without even providing stopgap relief from the international sharks that circle it ever closer. Billions more will shortly be due. There is no way to get the money except through further loans, and the further indebtedness that comes with it.
There was no point in making the current payment. Greece is and has been in default on its alleged debt since 2009. It cannot escape it without money of its own, and there are only two sources for that. Greece must either print its own currency, or borrow from other creditors willing to lend. It probably needs to do both. But the poker game the government of Alexis Tsipras has been playing with the so-called Eurogroup of finance ministers is rapidly approaching an end. By refusing to negotiate with the banking consortium of the Troika, as his predecessor Antonis Samaras had done with such disastrous results, Tsipras hoped to force the European Union to deal with Greece on a sovereign level, and not merely as a client in bankruptcy court.
It was worth a shot. But the strategy has failed. The Eurogroup has been fully as inflexible as the Troika was, and, instead of elevating the discussion to a political level in which the responsibilities of a member state toward its own people might be considered in the context of a union of states, the Eurogroup has simply reiterated the bankers’ mantra. The result has simply doubled down the pressure on Greece, and given an odious debt the specious legitimacy of a political obligation. As The New York Times reported at the time of the most recent payment, “European finance ministers . . . were joined by representatives of the I.M.F. and the European Central Bank” in demanding further ‘reforms’ (i.e., immiseration) before considering a fresh tranche of loans.
There is deep division within Syriza about how to go forward, but there is really only one step forward. The Greek electorate overwhelmingly rejected PASOK, the party in power when the European Union foisted disaster on the country in 2009, and put its hopes in the conservative alternative, New Democracy. The policies of the Samaras government might be most charitably summed up as magical thinking: swallow the Troika’s harsh medicine, and eventual solvency might be hoped for. Of course, the elites who constituted the governing class of both parties had their own view of who should do the swallowing and suffering. Their bottom line was that membership in the Eurozone had to be defended at all costs, which meant, in practice, that the wealth of those elites could not be subject to a deflationary return to the drachma. Instead, the workers of Greece would pay the price in what was delicately called “austerity”: surging unemployment, drastically cut wages and social spending, and relentless tax hikes on basic services. Greece would bleed so that the wealthy might thrive.
Syriza came to power on the promise of repudiating austerity and forcing the EU to renegotiate the debt. It lacked, however, a national consensus on how to force the hand of its creditors. Greece has and has always had only one card to play, a repudiation of the debt and an escape from the euro. Repudiating the debt would mean the immediate cessation of a policy which placed the satisfaction of foreign creditors above imperative national needs, and halt the drain of currency from the country. A return to the drachma would give Greece the sovereign power of creating and regulating its own money supply.
The risks and costs of such a policy are well known, although every international default is a different story. The notion that a default under present circumstances would be national suicide is a bankers’ bugaboo. In fact, Greece has defaulted on international debts several times over the past two centuries. It has lived each time to tell the tale, and it can live to tell it this time too.
There is a school of thought that the Berlin axis would like nothing more than to force Greece out of the Eurozone, and then to pile on the punishment as a caution to others. No doubt such sentiment exists: it is often enough on display. Whether it is an actual endgame strategy is another question, since the risks of a Greek exit are substantial for the EU too. Both sides have been playing chicken for the past several months. Interested onlookers, both inside and outside the EU, hope that the parties will back off from the brink and find a way out.
The problem, however, is that there is no way out within the system as constituted. The creditors could write down the debt and give Greece a fair chance of recovery. They do not wish to do so, however, lest they set a precedent for other countries similarly crushed by austerity. Greece cannot continue on its present course without sacrificing an entire generation and risking a fascist revolution. It has already gone a considerable distance in this direction, but it cannot long go further. You can ask much of a people, rightly or wrongly. But you cannot ask them to give up hope. In other words: what is going on is not a negotiation in which both sides can hope to find an accommodation they can live with. It is a battle, and one side or the other must win.
The European Union can survive a Greek exit, at least in the short term. Greece cannot survive being bled dry indefinitely. If it wishes to preserve itself, and its democracy, it has to prepare itself to leave the Eurozone at the least. And it will have to take that step, sooner rather than later, unless the other side recalculates its own core interests.
What are those interests? This is a complex question, of which the debt issue is only a small and one might say an essentially symbolic part. Germany rules the European Union, but (as with the wartime Nazis) with a coalition of more or less willing partners. These are, generally, the northern states of Europe—Belgium, the Netherlands, and Scandinavia, with France as a hesitant ally and Britain a fellow traveler. But Germany calls the shots and sets the overall policy. This was true in the Third Reich, as it is in the Fourth. And German interests have shown a remarkable continuity for well over a century, stretching back to the Imperial Germany of the late nineteenth century. These might be most generally summed up in a single phrase: the Ostpolitik.
Pre-World War I Wilhelmine statesmen spoke of a Drang nach Osten, literally a “drive to the East,” whose spearpoint was a so-called Berlin to Baghdad railway that would facilitate Germany’s economic and political penetration of the Balkans and the Middle East. Behind it was a wide-ranging plan to challenge and ultimately displace British and French imperial interests in the region, leapfrogging over its nominal Austrian ally and taking advantage of the slow-motion collapse of the Ottoman Empire.. These ambitions were thwarted by World War I, but revived far more aggressively and comprehensively by Adolf Hitler, whose forthright plan to colonize Eastern Europe and annex the oilfields of the southern Balkans, the Russian Caucasus, and the Middle East that were critical to German dominium won him the support of Germany’s industrial elites.
Once again, defeat in war frustrated this imperial vision, and resulted in the division of Germany itself. But the German phoenix soon revived with the creation of West Germany, which, rebuilt by the Marshall Plan and militarily protected by NATO, had by the mid-1950s become once again the economic powerhouse of Europe.
The term Ostpolitik itself was first used to describe West Germany’s efforts to cultivate the Soviet Union independently of American influence. This involved the first frank acknowledgment if Germany’s wartime atrocities by its liberal Chancellor, Willi Brandt, in the early 1970s. By this time, the European Union was an ongoing project, and its future, beyond the bounds of the Cold War, lay once again to the undeveloped southern and eastern perimeters of the Continent. Brandt’s show of repentance was doubtless sincere, but it was also strategically timed. That the Soviet Union would collapse within less than two decades could not be anticipated. But that the gradual evolution of its sclerotic economy toward an accommodation with capitalism—the road undertaken by post-Mao China by the late 1970s—would create future markets and opportunity, was a reasonable expectation. The drive to the East could be accomplished by other means. Russia was of course the great obstacle, and it was hardly going to be disarmed by German apologies. But Ostpolitik was a beginning.
In the context of global politics in the 1970s, Ostpolitik was part of a larger pattern of Cold War disengagement. Dètente had eased tensions between the U.S. and Russia, and Nixon’s opening to China had challenged long-hardened assumptions about the faultlines of world conflict. Part of Nixon’s gambit was an attempt to exploit the rift between the Communist superpowers themselves. This in turn, however, made it more difficult for him to object to a more limited and tentative engagement between West Germany and Russia.
The fruit of Ostpolitik would only be realized when the Soviet Union collapsed, East and West Germany reunited, and the Treaty of Maastricht created a single currency, the euro, in most member states of the European Union. These events all occurred within a three-year span between 1989 and 1992, and each had profound consequences. “Russia” was suddenly reborn as the shrunken remnant of what had been the Soviet empire, shorn of a third of its territory and nearly half its population. It immediately plunged into the most devastating depression in modern economic history, in part the result of its traumatic losses and in part of the shock capitalism that, eagerly exported by Western ideologues, provided a cover for former Soviet apparatchiks to loot state assets to their own benefit. Meanwhile, the division of Germany, the chief constraint on German ambitions, came to a sudden and unprepared end. West Germany, already the hegemon of the European Union, augmented its territory and population by a third just as Russia was suffering a radical loss of both. This was not without its costs, as the two Germanies had become different nations in many respects during the long postwar years. But there was little doubt that they would reintegrate, and face a postcommunist Eastern Europe far more weakened and vulnerable—that is, more ripe for colonization—than at any time in modern memory.
The last element to fall into place was the creation of the euro. It could not have come at a worse moment, as the left opposition presciently warned: some will still recall the “No to the Treaty of Maastricht!” placards that covered Greece at the time. It made the German mark effectively the currency of Europe, and set the stage for the final German mastery of the Continent.
Why should this have been permitted, indeed fostered? For a century and a quarter, since the unification of Germany in the Franco-Prussian War of 1870, the overriding political issue in Europe had been the containment of Germany. The Soviet-American rivalry of the Cold War had in part obscured this, however, and the division of Germany itself had seemed a sufficient check on Teutonic ambitions. This confidence was not universally shared, to be sure. I retain strongly the memory of ordinary Russians coming up to me in Leningrad at a time in Soviet-American relations when American visitors were rare and asking why the U.S. had sponsored German recovery and rearmament. Did America not realize, they told me, that German aggression was the single greatest threat to Europe?
Of course, it was perceived Soviet aggression that U.S. policymakers were focused on, and Germany was viewed in Washington as a dependent ally, not an independent actor. That economic rather than military superiority was the key to future dominance was not envisioned by strategists preoccupied by a nuclear arms race. Nor did it seem the principal security issue in the immediate aftermath of the Soviet collapse in December 1991. The reintegration of the two Germanies seemed then only a smaller version of the problem presented by the end of the Soviet order in Eastern Europe. With communism repudiated, how was Eastern Europe to be organized, and by whom? The European Union seemed the only entity capable of taking on the job, and a common currency was seen as an essential tool in this effort. Since former Soviet republics and satellites were still far from qualified for admission into the EU—a period of shock capitalism was required of them, too—NATO was the instrument of choice for annexing the East, assurances to the contrary given to the outgoing Soviet government notwithstanding. This gave weak and unstable Eastern governments access to Western investment and largesse, as well as security against a Russian military that, while temporarily distressed, was still perceived as menacing. Mikhail Gorbachev had refrained from using his military in an effort to keep satellite states under Russian control; there was no assurance, but for NATO, that a future Russian leader might not deploy troops in what Moscow now referred to as its “near abroad.”
To this point, American and German interests were still congruent, and Europe permitted the use of its own NATO forces as part of America’s new adventurism in the Middle East. But those interests began to diverge as European losses mounted on foreign battlefields, and German pressure on Eastern Europe, including an attempt to revive Nazi-era ties with Croatia that helped precipitate the breakup of Yugoslavia, threatened to destabilize rather than secure the region. The overall project remained to project Western influence into it, and to marginalize if not exclude Russia as a European power. But the net effect was to extend Germany’s dominium in the European Union up to Russia’s very borders—in geopolitical terms, to reenact Hitler’s advance into the region in the 1930s. The only difference was that the military might that secured this advance was not Germany’s own, but that of its American cat’s-paw. NATO, whose operational capacity was entirely dependent on American power, would serve as Germany’s Wehrmacht.
This state of affairs, as the world is now aware, culminated in the February 2014 coup in Ukraine, for Russia the most geographically and ethnically sensitive of the former Soviet republics, and a proxy war erupted that has continued since. After almost silently deploying eastward over more than twenty years, NATO’s de facto arrival in Kiev—and Germany’s—had at last galvanized a Russian response. A world that had paid little attention to this revival of the Drang nach Osten suddenly found itself faced not simply with a new version of Cold War antagonisms, but an actual hot war on European soil.
These developments may seem tangential to the Greek situation, but they are the framework within which it must be understood. Greece is, of course, a part of Eastern Europe, as well as of Europe’s Mediterranean tier. Although it had never been part of the Soviet bloc, it shared a number of features with other geographically proximate states, including relative underdevelopment, capital insufficiency, and a bloated public sector. This made it a classic target for exploitive capital interests abroad. Its case then was not unique, but rather typical of the approach that northern and especially German interests took in the region. Its situation is likewise unexceptional, except that the economic crisis forced on it brought it effectively into bankruptcy from the beginning, and hammered it harder than any other state.
The European Union had advertised itself as a community that, through the application of common standards and collective governance, would create a peaceful and prosperous Continent with economic justice and security for all its members. This project has now failed so catastrophically that its fundamental premise must be questioned. I would suggest that what the EU actually represents is the deliberate exploitation of a poorer and more vulnerable economic sector by a richer and dominant one: in short, of economic colonialism through predatory investment that, with the connivance of local domestic elites, has rendered the target areas ripe for the confiscation of wealth, assets, and human talents. It is, but for the pretense of a common enterprise, a classic example of the behavior of richer nations and their international financing mechanisms toward poorer ones the world over.
Such transnational schemes of exploitation under the pretext of creating general prosperity have been seen before. The Nazis represented their empire as such to a conquered France in 1940, and Japan touted its own plan to rape the resources of China and Southeast Asia as the Greater East Asian Co-Prosperity Sphere. In both cases, the propaganda was not without takers; in occupied France, for example, the Vichy Government aggressively promoted fascist propaganda about achieving national regeneration on the German model.
The European Union has shown its face openly as such a venture since 2008. But to call it by its own propaganda title is misleading. The EU is the triumph of German domination on the Continent, a domination it has pursued since 1870. This is why I prefer to call it by a more accurately descriptive title: the Fourth Reich.
The dynamic of this new Reich is of course German domination and aggressiveness, but its linchpin is the relationship of Germany and its chief subject client, France. The European Union was born of a Franco-German understanding in the 1950s, but its roots go back nearly a hundred years before that, to the offer by the then-Prussian Chancellor Otto von Bismarck to the Emperor Napoleon III of a Franco-German condominium in Europe in exchange for neutrality in Prussia’s planned war with Austria. A defeated France dreamed of an at least junior partnership with Nazi Germany in the 1940s, and such French leaders as Robert Schuman and Guy Mollet, seeing the handwriting of a renewed German hegemony on the wall after the war, sought to tame or at least join it by proposing the joint enterprise zone that evolved into the EU.
Schuman and Mollet were well-intentioned, but their vision failed no less than those of Napoleon III and Marshal Pètain. Germany proved too strong, and its ambition more powerful than any constraint. The French could, even today, repudiate the Fourth Reich. They are fearful, however, of the consequences of such a challenge, and so they march in lockstep with Berlin. The fact is that France was not truly liberated in 1944, the sacrifices of D-day notwithstanding, and that a Vichy government has—apart from its brief Gaullist interlude—continued to appease Germany to the present day.
If even France can’t escape its German thralldom, though, how can Greece? The answer is that it has, at this point, no other choice. It has entered a vicious cycle of debt slavery on the terms imposed by Berlin that it cannot hope to escape except by repudiation. All the discussion thus far, the posturing of the colorful Yanis Varoufakis notwithstanding, has involved a mere loosening of the chains. It is abundantly clear that the Germans and their IMF partners have no intention of cutting any Greek government slack, particularly one with a populist agenda. Rather, their inflexible demand is that Greece wrap its chains still tighter, until the last life is strangled from it.
Under these circumstances, what Greece faces is a crisis of national survival. It is the same crisis it faced in 1940-41, minus the invading armies and tanks. The stakes, however, are the same. A responsible Greek government would prepare the country for the challenges and sacrifices ahead, for no one should underestimate the vindictiveness with which a Greek exit from the Eurozone will be met. It must also convince the mass of the population, and the wider Diaspora community as well, that those sacrifices will be shared by all.
We will see, and rather shortly, whether Syriza can be that government.