Monday 24 October 2016

Greece crisis: Are the Germans about to call the Greeks' bluff?

Philip Johnston

Published 07/07/2015 | 14:31

A pensioner is helped by a bank manager after collapsing while waiting along with dozens of other pensioners outside a National Bank in Athens, Greece, July 2, 2015. REUTERS/Yannis Behrakis
A pensioner is helped by a bank manager after collapsing while waiting along with dozens of other pensioners outside a National Bank in Athens, Greece, July 2, 2015. REUTERS/Yannis Behrakis

You have to admire the Greeks.

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They certainly don’t like getting pushed around and their history is replete with tales of derring-do in the face of overwhelming opposition. Whether against the Persians at Thermopylae, or the Romans at Corinth, or the Ottomans in the Peloponnese, or the Germans in Crete, the Greeks have heroically stood their ground. Unfortunately, in most of these instances they have eventually been overwhelmed.

Over the past 2,000 years, rebuilding Hellenic national identity has often been a long and painful process, with help from outsiders like Byron who considered the country of Homer and Plato, of Pericles and Aeschylus, to be the cradle of civilisation. “A land of slaves shall ne’er be mine,” he wrote in Don Juan.

The defiant rhetoric from the Greeks following their emphatic rejection of the EU’s terms for further bail-outs echos this history of subjugation followed by redemption. It is the reason Greece wants to stay in the European Union, when you’d have thought they would want to get out as quickly as possible.

Taking a lead from their oddball neo-Marxist government, the “No” voters have denounced their EU masters as bullies, and even as terrorists. And yet they also insist that they are “good Europeans” and want to remain in both the EU and the eurozone. Eurosceptics may find this hard to understand; but given the history of Greece it does make sense. After the fall of the Colonels in 1974, Europe offered the Greeks the democratic anchor they needed. The same was true for the Spanish and the Portuguese emerging from dictatorship in the Seventies

In fact, most member states have a powerful historic rationale for belonging in the EU: Germany to counter its propensity to dominate Europe; France because of the threat from Germany; Ireland to escape the shadow of the United Kingdom; Poland and the eastern European states to break with their past as Soviet satellites.

By contrast, the British joined because it was thought a common market would help our ailing economy. This is why we have always found it impossible to take part in the development of Europe as a quasi-state with no borders, its own currency and other elements of nation building such as common judicial decision-making - even if we have given way on the latter by signing up to the European Arrest Warrant.

The euro was born of a desire among the core EU countries for closer union. I reported on the summit in Rome 25 years ago, where Mrs Thatcher was ambushed by a troika of Jacques Delors, Helmut Kohl and Francois Mitterrand as they set a date for monetary union. From the outset, it was evident that that this was an ideological, not a financial, plan; and though Mrs Thatcher denounced it as “cloud cuckoo land” and threatened to veto it, in the event she lost, forced out by her own party.

Mrs Thatcher took the view that a single currency would of necessity require a common fiscal policy. In this she agreed with Edward Heath - only he wanted it and she didn’t. They both understood that the inexorable logic of a common currency area would lead to eventual political union and the dismantling of nation states - given the underpinning principle of burden sharing. This is the point the Greeks are making, even if they want to take as little as possible on their own shoulders.

So are those countries who are holding the purse strings - notably Germany - willing to recognise the ineluctable consequences of their own grand design? Just like the Greeks, they want it both ways: they like the concept of a united Europe, but only on their terms. They let Greece and other countries into the eurozone knowing they were unfit members The seeds of the current disaster were sown at that point.

This is the reality confronting EU leaders in Brussels today. Ejecting Greece would mark the point at which the forward march of the great European idea goes into reverse. Do they want that? Nigel Farage, the Ukip leader, said “a tired, stumbling European Union is dying on its feet before our very eyes”. But he under-estimates the desperate desire of the EU to keep the show on the road.

Let’s remember that past referendum rejections by the Danes (of Maastricht), by the Irish (of the Nice and Lisbon treaties) and by France and the Netherlands (of the EU constitution) did not stop the juggernaut. Ireland and Denmark were simply ordered to go back and vote the correct way, albeit with some concessions in Denmark’s case, while French objections were assuaged by the simple device of dressing up the constitution in another guise.

The Syriza government in Athens is gambling that the Germans will pay a far higher price to keep them in the club than they have so far been prepared to countenance; and they may well be right. Indeed, far from falling apart, this may be the moment when the EU takes a decisive step in the direction of political union.

This could work to David Cameron’s advantage as he embarks on the renegotiation of Britain’s terms of membership. A new treaty will be needed and the rest of Europe will want to avert an even bigger crisis than they face now. On the other hand, British Outers might argue that the EU remains on track towards “ever closer union” and any exemption won by Mr Cameron from this central tenet of the Treaty of Rome will be meaningless.

However, even if the eurozone leaders want closer political union, will they be able to take their voters with them? Chancellor Merkel is under huge pressure for even contemplating easier terms for Greece. “Where there is a will there’s a way,” she said - but is there the will in Germany to let the Greeks off the hook? If they were to do so, how long would it be before the Spanish, Portuguese, Irish and others locked into austerity programmes demanded similar treatment?

This is, indeed, a moment of truth in the process of European integration that Helmut Kohl once described as irresistible as the flow of the Rhine. The Germans now say there is now no basis for a deal to keep the Greeks on board. We shall see.

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