Greece and Russia are both taking advantage of the eurozone’s obvious weakness.
The Greek crisis was reported to “loom” over this week’s meeting of G20 finance ministers in Istanbul. However, there were enough dangerous whatever-it-takes economic policies on display — competitive currency devaluations, calls for yet more spend-yourself-rich Keynesianism, the European Central Bank’s quantitative easing program — to put Greece’s can’t-pay-won’t-pay approach in the shade.
It seems likely that some agreement will be concocted to paper over the eurozone’s — latest — Greek crisis, despite tough talk on Tuesday from German Finance Minister Wolfgang Schaeuble. The bigger issue is whether this merely guarantees a more wrenching crisis down the road.
Even the alleged austere Germans are not threatening completely to pull away the punch bowl from Athens. They just want the Greeks to agree to extend the current bailout, which already gave Athens huge debt writeoffs. The Greeks have been saying nah, they’d rather ditch a nice round 30% of the bailout agreement.
Greek Prime Minister Alexis Tsipras is making a great play of his fidelity to the mandate he was given in the recent election. That mandate amounts to avoiding cruel Teutonic austerity by any means possible, including invoking Nazi war reparations.
This situation arises, superficially, because Greek governments — never serious about financial self-discipline when they adopted the euro — have repeatedly been indulged, thus encouraging them to push the envelope. It’s all about moral hazard.
The Greek standoff has a counterpoint at the other end of Europe, where the EU’s solidarity in pacifism has virtually guaranteed military aggression on the part of Vladimir Putin. Both Mr. Tsipras and Russian President Vladimir Putin are merely taking advantage of obvious weakness.
There is a great deal of misunderstanding about the nature of austerity in such circumstances, as if accepting the economic consequences of bad policies are merely an option. Those consequences are unavoidable. The only issue is who will pay for them.
Those who are against austerity might well understand that the piper has to be paid, but they reject that the payment should be made by the poor Greeks, which certainly seems a humane position. Instead, they demand that the price of Greece’s feckless policies be paid by the “rich,” which is to say European and Western taxpayers more generally via the so-called troika of the IMF, the European Central Bank and the European Commission.
But if Greeks see that the troika will cave under pressure, as it has constantly since the Greek/euro crisis first exploded five years ago, they have every reason to vote for a government that promises intransigence. De- spite her finance minister’s tough talk, German Chancellor Angela Merkel admitted in Washington on Monday that the Greeks still have wiggle room. “I’m waiting for Greece to come forward with a viable recommendation and then we’ll talk about it,” she said. How wiggly is “viable?”
The ¤64-billion question — times four if we’re talking about the current Greek bailout package — is: Why does the troika cave time after time? One big clue appeared on this page on Tuesday in a commentary by John Browne, senior economic consultant to Euro Pacific Capital. Mr. Browne pointed out that the EU is “the first great experiment in global governance,” that is a world controlled by bureaucracy — the UN dream.
People might imagine that the Greek/EU standoff amounts to a conflict between the irresponsible loony left and the forces of level-headed economic management, but despite Germany’s supposed hard line, it is not. It is a conflict between the far left and the more “moderate” Fabian EU bureaucratic left which is engaged in the long game to bring the world under non-democratic control.
It is no coincidence that the EU is the most avid supporter of vast climate agreements, the ne plus ultra policy of aspiring global governors. It is also no coincidence that such negotiations are both massive failures and yet retain their zombie momentum, which is embedded in bureaucracies pulling the strings of politicians, not the other way round.
We are taught to tremble at the prospect of a “Grexit,” a departure of Greece from the eurozone, whereas nobody uses the word “Grouster,” whereby Greece would be thrown out for flouting EU membership conditions.
This cannot be understood unless one grasps that the spirit of global governance is one that actually rejoices in national incompetence as a rationale for greater central control.
On Tuesday, this page also quoted the FT columnist Anatole Kaletsky suggesting that Greek Finance Minister Yanis Varoufakis’s idea of strategy was “to hold a gun to his own head, then demand a ransom for not pulling the trigger.” That’s moot. Mr. Varoufakis knows he is holding a gun to the head of the aspiring global governors, who are more than happy to sacrifice productive Europeans to their global bureaucratic goals. Only Germany stands in their way. Sort of.
Mr. Kaletsky, who is himself statist to the core, let the cat out of the bag when he suggested that the Greeks had erred strategically in attempting to “overpower bureaucratic opposition without the usual compromises and obfuscations, simply by brandishing their democratic mandate. But the primacy of bureaucracy over democracy is a core principle that EU institutions will never compromise.”
Does that “core principle” not sound a little scary? As a “Common Market” with an emphasis on free trade, internal non-aggression, and as a bulwark against the old Soviet Union, a European union was a great idea. But those who have come to control its bureaucratic heart have always had a quite different objective: Soviet Union Lite, i.e., without the tanks.
That plan is unravelling at both ends.
The spirit of global governance rejoices in national incompetence as a rationale for greater central control