Eurozone crisis: Expel Greece – a cure worse than the disease
22 February 2012
Drive Greece out of the euro, and build a federal Europe behind a protective firewall? Italian columnist Barbara Spinelli warns that this idea, which appears to be gaining ground with a number of European leaders, would not only fail to resolve the crisis but would also put an end to Europe’s common culture.
We have become inured to the assertion that Greek bankruptcy would not be the long dreaded catastrophe it was supposed to be. In substance, the argument states that the response to Greece’s incurable financial illness should be surgical, and Athens should be excised from the eurozone like an inflamed appendix.
The priority should be to avoid contagion, and the use of the term “firewall” with regard to new European stability funds is significant: firewalls protect computer systems from intruders, and Europe’s firewall will protect those on the inside from association with those who have been disgraced and denied access.
Welter of short-term measures
Like the Maginot Line, built by France in the 1920s and 1930s to protect against German attacks, the firewall will be a fortification as well as a clinical barrier: we are expected to take comfort in the illusion of an inviolable wall, even though we know what eventually became of Maginot’s defences, which were rapidly outflanked. In Strange Defeat historian Marc Bloch wrote of the war being lost in hearts and minds well before the fall of the Maginot Line, "in the rear guard of civil and political society" before the front.
The truth is no one really believes in this illusory firewall which sacrifices intellect on the altar of imagination. If they did, the European Union would not have decided to grant yet another colossal loan to Greece on 21 February, and there would be no talk of a new federal EU architecture, with nation states handing over more sovereignty to a European government. Progress has been slow, no one has tackled the crux of the problem (the issue of the EU resources required to conduct an effective investment programme).
At times you could be forgiven for thinking that the governments of "major" countries are waiting for Greece to go bankrupt before building the Union they want to construct. This is the thesis advanced by economist Kenneth Rogoff, in an interview with Spiegel: once Athens has been expelled from the union, the impetus of the crisis can be used to accelerate the construction of a United States of Europe. But can a new union be built on the ashes of Greece? And what kind of union would we have had without the pressure of the Greek crisis?
As it stands, the welter of short-term measures to counter the turmoil in Athens have undermined the eurozone and the idea of European solidarity in the face of adversity. Europe will have difficulty forming a federation if its first action is to jettison countries that are unable to make ends meet. Clearly Operation Firewall will not only be painful for Greece, but also for Europe.
A great leap backwards
This is the argument put forward in The Economist by the former central-bank governors of Argentina and Mexico, Mario Blejer and Guillermo Ortiz, who want to remind Europeans of the cost of Argentina’s default in 2002, and the differences between the economic collapse of Argentina and the dreaded credit event in Greece.
Admittedly, Argentina benefited from six years of growth when the peso was devalued and unpegged from the dollar, but the world was not in the grip of a recession like the one we are experiencing now. Recovery was spread over a decade, and the peso still exists. The drachma, however, no longer exists and its reintroduction would be a terrible blow for Greece (how can we expect the country to reimburse debts denominated in euros with a devalued drachma?). Finally, the former central bank governors point out that the IMF was ill-equipped for long-term engagements required to avoid a crash that was a terrible trauma for the Argentinian population.
What is the cause of the malaise in Europe? Is it the vacillating economy, our enfeebled political class, or is it a cultural problem? The reality is all of these factors are to some extent to blame, and the Europe that will emerge from this ordeal will be reinforced or further weakened by the remedies used to treat the three ailments of its economy, its culture and its politics.
At the cultural level, we have made a great leap backwards of 90 years in inter-European relations. Listening to the people, one gets the impression of a return to the nationalistic patterns of the 1920s and 30s. An aggressive rancour is taking root. For months, Greek newspapers have depicted German leaders as Nazis. At the same time, Athens has unearthed the question of war reparations that Berlin still owes to the European countries occupied by Hitler.
Europe needs enlightened citizens, not scapegoats
That is giving short shrift to the episode of 1945 in which we reasserted our confidence in the German nation and undertook to unify Europe. That confidence had a specific meaning, including a financial one. War reparations, Germany's curse after the First World War and which plunged it into dictatorship, should never exist again (Israel being an exception).
What we accorded to Germany in 1945, we are not able to accord today to Greece for strategic reasons and because the political culture has changed. The errors committed by Athens are not crimes; yet Greece must atone on top of paying for them. Even Greek elections are looked at askance. The reparations demanded of Greece are severe and they engender anger and resentment. Obviously, there are no strategic reasons that would motivate maintaining Greece in Europe. That requires a world view and today's outlook is no longer the same as in 1945 – 1950.
This time-warp mentality has disastrous consequences on politics. How can a federal Europe emerge if a culture so disconnected from the lessons learned by Europeans from the two World Wars is imposed? The choice of a president such as Joachim Gauck in Germany is good news because the German people contributed to this climate of suspicion, even if their concerns were sometimes justified.
Europe needs enlightened citizens, not scapegoats. It requires common growth of a different type rather than years of recession, internal squabbles and wobbly democracy. Otherwise, it is doomed to live through a "strange defeat" of its own, born in the rear-guard of civil society before breaking out in the line of defence established to keep contagion at bay.