In the summer of 2015, the Greek and German governments met to negotiate Greece's third bailout deal since the global financial crisis of 2009. Dissatisfied with the first two bailout agreements, the Greeks elected, in January 2015, the leftist Syriza party, headed by Prime Minister Alexis Tsipras, into power on promises of eliminating austerity and standing up to the European creditors. Tsipras, accompanied by his finance minister Yanis Varoufakis, faced off with German Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble. The negotiations, riddled with brinkmanship and antagonism, quickly soured; Schäuble controversially proposed a Greek exit from the Eurozone, dubbed a 'Grexit,' and some members of the Greek government called for German World War II reparations. In light of these stressed negotiations, two conflicting views emerged, one assigning blame to Greece while the other condemns Germany.
The opposing perspectives in this conflict, admittedly, both hold merit; neither Greece nor Germany has conducted itself with absolute infallibility. Rather, they have both committed their own unique set of mistakes that have intensified the troubles afflicting the Eurozone. In the subsequent sections, I examine the mutual guilt of Germany and Greece. In this discussion, I focus on the diplomatic behavior of the two nations, as this crisis is diplomatic in nature. Although the negotiations comprise an economic debate, the greatest source of contention lies in the polarizing diplomacy between Greece and Germany. My aim in this essay is thus not to examine the economic impact of Greek reform efforts or the Eurozone's austerity policies, but instead to address the ailment poisoning the negotiations.
The greatest threat to the dream of a united Europe is not economic crisis, but rather intense divisiveness between member nations, showcased in the current antagonism between Greece and Germany. In times of economic calamity, a divided Europe will surely prove weaker than a united one. Disunity, accordingly, is the most pressing problem facing Europe today. Regardless of questions of austerity and the fiscal structure of the Eurozone, this crisis holds grave historical implications. Greece and Germany are blindly leading the march towards perpetual economic and diplomatic conflict reminiscent of the turbulent first half of the twentieth century in Europe. In order to escape this grim fate, Germany must assume leadership and embrace the spirit of forgiveness that, after World War II, salvaged the continent from destruction and established the framework for European unification.
Erratic Greek Diplomacy
The shortcomings of Greek diplomacy are highlighted in the pro-German position. Those who support this perspective view these negotiations as a demonstration of the stark contrast between adept German diplomacy and incompetent Greek behavior. They assert that the German government skillfully navigated the negotiations while the Greeks, without a backup plan, acted erratically and unpredictably. Furthermore, Germany's strong-handed negotiation style is justified, advocates of the German position claim, by the need for order and integrity within the Eurozone; the whims of Greek leadership must not compromise proper international conduct.
The juxtaposition between skillful German negotiations and inept Greek diplomacy affords insight into the diplomatic deficiencies of Greece. Neil Irwin, a New York Times correspondent, explains this difference by offering a telling comparison between the experience levels of the Greek and German negotiating teams; Schäuble began his tenure in the German parliament two years before Tsipras was born (3). Though age is not a definitive measure of proficiency and skill, it can provide an insight into the disparity of experience. Merkel, given her long, esteemed career as an international diplomat, directed the negotiations with a "deft diplomatic touch," complementing the German "combination of patient diplomacy and clever brinkmanship" (Irwin). With their enhanced diplomatic abilities and experience, pro-German commentators argue, the Germans simply out-negotiated the Greeks.
On the other hand, the Greek diplomatic team, headed by Tsipras, floundered in negotiations. The Greek cause, although championed by renowned economists Thomas Piketty and Paul Krugman, was tainted by the erratic behavior of the Greek government. Tsipras crippled his negotiating power through "inconsistent policies and frontal challenges to German leadership" (Irwin). This injudicious strategy is best exemplified by the surprise referendum called in Greece. Tsipras, suddenly and unexpectedly, withdrew from the negotiations and put the bailout terms to a popular vote. With a resounding rejection of the terms by the Greek people, the Prime Minister returned to the negotiations still seeking a bailout deal. The Greeks made so many inconsistent and unexpected moves that even their supporters became disenchanted (Irwin). Krugman, an adamant austerity critic, admitted that he was shocked "the Greeks prepared to make a stand without having done any contingency planning," and that he "may have overestimated the competence of the Greek government" (Interview). The Greek referendum, albeit a symbol of democracy and defiance against the European creditors, amounted to nothing more than a shoddy diplomatic stunt with absolutely no backup plan. It only served to exasperate and temporarily distract the already weary observers and actors of the negotiations.
Supporters of the German position typically incorporate the theme of European integrity into their defense of German policies. Germany's actions have been underlined by intense "insistence on adherence to rules, fiscal austerity and dire consequences for countries that fail to live up to their obligations" (Irwin). Germany, as the economic and political powerhouse of the Eurozone, has enforced a strict code of conduct. This comprehensive, rigorous system of standards is key to achieving the order and stability necessary for a functional union. Under this system, the Syriza party cannot violate or disown the terms of previous Greek bailouts, irrespective of their efficacy. Such actions would compromise the integrity of the Eurozone; accordingly, Germany is justified in implementing strong standards of conduct on the continent. Although Germany is clearly the coercive actor in the negotiations, their responsible, orderly behavior is far more disciplined than that of Greece.
The pro-German camp observes the Greek crisis as a juxtaposition of dexterous German diplomacy and clumsy, erratic Greek behavior. Supporters of the German argument draw on the theme of international order, citing the importance of Greek obedience to international standards of conduct. Germany, wary of its tainted past of militarism and international belligerence, has accepted this position of enhanced power with some hesitance, assuming the status of 'reluctant hegemon' in mainland Europe. Nevertheless, its leadership role in the negotiations has "helped make [Germany] a country that is both a little less reluctant and a little more of a hegemon" (Irwin). Undoubtedly, Germany has altered the European landscape in a manner that is alarming to peripheral nations, especially Greece.
German Self-Interest
Fearful of this growing German power over the continent, proponents of Greece accuse Germany of directly attacking Greek sovereignty. This perception has stirred intense, aggressive anger. However, this impassioned rhetoric is moderated by consideration given to the case of Greek incompetency. Greek supporters view the case as a belligerent German attempt to build economic supremacy in an imbalanced union of European nations. This assertion of greedy German extraction proves questionable when Brigitte Young compares it to the empirical record; nevertheless, Germany retains a position of political and economic dominance in the Eurozone. Though the German government claimed they wanted to restore order to a fully intact Eurozone, strong-handed and selfish German brinkmanship, supporters of Greece plead, drives a dagger into the dream of European cooperation and mutual prosperity. The German imposition of punitive and ineffective austerity measures completely disregards the generous relief the nation received after World War II; this very principle of forgiveness, which Germany now hypocritically threatens, is the foundation of European unification.
Charges of self-interested German policy comprise the crux of the pro-Greek position. This critique of German conduct originates with the notion of reduced Greek sovereignty. Germany's coercive diplomatic behavior has greatly reduced Greece's negotiating power and ability to determine its own policy. Greek proponents protest that the punitive German demands are unreasonable and "go beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief" (Krugman). Greece has been forced to slash public spending under the strict austerity measures demanded by Germany. Not only do the proposals offer little optimism concerning economic recovery, but they revoke Greece's privilege to act as an independent state. Under the bailout agreements, the Greeks have little control over their economic policy. Pro-Greek observers, including Krugman, claim that such measures, imposed by Germany, are actively destroying Greek sovereignty.
The Greeks' extended suffering, allegedly externally inflicted, has stirred great despondency and ire. This distressed anger can be observed in the unrestrained rhetoric employed by Greek-sympathetic observers of the bailout crisis. In an acrimonious and confrontational tone, Krugman crafted a blog post that called German behavior a "grotesque betrayal of everything the European project was supposed to stand for" ("Killing the European Project"). Piketty, in an open letter addressed to Chancellor Merkel, continued this theme of intense rhetoric by likening, in plain terms, Greece's forced acceptance of the bailout conditions to coerced suicide. Krugman and Piketty take few cautions with their language and make clear their resentment of German actions. Although this aggressive tone may slightly distort and obfuscate the pro-Greek position, the forceful rhetoric reflects the inordinate amount of unnecessary suffering the Greeks have experienced; even respected economists outside of Greece are incensed.
Not only do the experience and reputation of Krugman and Piketty lend their arguments credibility, but their consideration of Greek incompetency further expands the sophistication and strength of their pro-Greek positions. Piketty admits that "corruption, tax evasion, and bad accounting by previous Greek governments helped create the debt problem." Likewise, Krugman asserts that even individuals who consider Tsipras an "incompetent twerp" can agree that Germany is behaving in an irresponsible, immoral, and selfish manner ("Killing the European Project"). This consideration helps to prevent the passionate, accusatory language employed by Piketty and Krugman from discrediting the pro-Greek position. No matter the degree of incompetency in the Greek government, of past or present, Germany can never justify its forceful restriction of Greece's sovereignty.
Pro-Greek commentators also accuse Germany of pursuing economic domination in an imbalanced Eurozone, primarily through the subjugation of Greek economy. The punitive bailout terms favor German economic supremacy and "reflect the politics of today's Europe rather than a viable plan help Greece's economy in the short run" (Irwin). Currently, the European balance of power favors Germany, and Merkel has used this influence to cement German political and economic dominance. The bailout programs, enforced and created largely through German efforts, have inflicted a chronic economic and humanitarian crisis in Greece: protracted depression, unsustainable debt burden, excessive unemployment, forty percent child mortality, increasing infant mortality, and fifty percent youth unemployment (Piketty 2). Although these troubles can be accredited, in part, to irresponsible Greek governments of the past, Germany has done nothing but exacerbate the crisis. The new bailout deal, from the summer of 2015, is based on the same principle of austerity as its precursors; accordingly, it is bound to continue the economic devastation of Greece.
Regardless of Greece's diplomatic ineptitude, Germany is not justified in exploiting its diplomatic and economic advantage to extract personal gain from the Eurozone. Germany's dominant export economy not only boasts the greatest size in the Eurozone, but it possesses the power to subdue and perpetually indebt dissident and debtor nations like Greece. Young assesses the claim that Germany is using this power with malicious intent and effects. Germany, through moderation of its wages, has gained "the competitive advantage to dominate trade and capital flows within the Eurozone" (Young 1). Those who cry foul play claim Germany uses these competitive wages to direct economic activity into its own territory and away from peripheral nations like Greece (Young 1). German export success, however, has primarily been driven by expansion into emerging, specifically Asian, markets; furthermore, it has actually generated healthy economic activity for the peripheral nations of Europe (Young 4). Ultimately, it is unclear if Germany is specifically using the Eurozone as a tool to funnel European wealth into its own coffers. Nevertheless, Germany has still moved to dominate the political and economic landscape of the Eurozone.
The dream of European cooperation forfeits some of its vivacity as the antagonism between creditor and debtor nations continues to deepen. While Greece is forcibly led into the thorny, destructive realm of austerity and international subjugation, its dubious fate becomes aligned with the fate of the Eurozone project: "the Greek government is being asked to put a gun to its head and pull the trigger. Sadly, the bullet will not only kill off Greece's future in Europe. The collateral damage will kill the Eurozone as a beacon of hope, democracy and prosperity" (Piketty 2). The economic health of the Greek populace is not the only casualty of this crisis; Germany is threatening the health of the united European continent as a whole. Young, a pronounced advocate of the German position, even admits, "the evidence clearly shows that [Germany] has become bolder in asserting its national interests against other members of the EU and Eurozone" (7). Germany, by pursuing its own agenda and interests, is distracted from furthering the mission of the Eurozone project. The dominant mainland country, though reasonable in seeking its own prosperity, must surrender some of its own interests, just as Greece does, for the greater good of the continent.
Beyond the deterioration of the Eurozone project, Germany's self-interested behavior, derived from a tragically short memory, stands in stark contrast with its own treatment following the Second World War. After the two World Wars ravaged Europe in the first half of the twentieth century, the continent emerged with a new, grandiose vision of hope and prosperity. Observers are apt to reminisce about this grand time for Europe; the redefined "Europe was founded on the forgiveness of past debts, notably Germany's, which generated a massive contribution to post-war economic growth and peace" (Piketty 2). Germany, the country that owes so much to the principle of forgiveness, has turned its back from this idea of altruistic diplomacy. As Germany continues to pursue self-interested ideals, it threatens the very foundation of European unity. This egocentric behavior could soon catapult Europe back to a state of perpetual division and struggle.
Through the impairment of Greek sovereignty, arousal of anger in observers, and pursuit of economic and political supremacy, Germany has damaged the dream of European unity and put the continent on a dark path lined with dangerous historical precedent. These treacherous implications associated with German behavior, highlighted by supporters of the Greek position, foreshadow a dangerous future for Europe and govern discussion of a way forward for the continent.
March Towards Destruction
There is fault to be found on both the Greek and German sides of this crisis. Supporters of Germany correctly identify the deleterious impact of unpredictable and indecisive diplomacy from the Greek government. On the other end of the spectrum, it is clear, as many observers have pointed out, that a German shift towards self-interested foreign policy has damaged the integrity of the Eurozone. The resulting gulf dividing the Eurozone, illustrated by this diplomatic conflict, proves dangerous for Europe. As the nations of the Eurozone continue to struggle over blame and policy going forward, they are driving the continent apart and threatening to lay the dream of European political and fiscal union, now considered "a sad casualty of the Greek debt crisis," in its grave (Mundle).
In this regard, solving the diplomatic crisis is of primary importance for Europe. The negotiations between Greece and Germany, albeit composed of some discordant economic debate about the efficacy of austerity, showcase this strained continental relationship, where "the economics have almost become secondary" (Krugman). Without an ability to effectively negotiate, solving the problem of Greece's debt sustainability within the framework of the Eurozone becomes nearly impossible. Europe, in this divisive condition, loses its ability to overcome a financial catastrophe; a united and diplomatically synergistic Europe promises better prospects of prosperity, and even survival, than a disjointed one.
To understand why the continued health of the Eurozone is so important, one must turn to the foundations of European unification. The eighth of May, 1945 marks a historic day for the continent of Europe, and the world as a whole; known as Victory in Europe, or VE, day, this date commemorates the Allied triumph over the Axis powers in Europe. Though it appeared a day for jubilation, Europe still found itself stunned in the aftermath of the bloodiest war in human history. World War II was the second catastrophic conflict to rage through the continent in the twentieth century. A morally exhausted Europe, it seemed, was doomed to perpetual warfare and unrest amongst its dissimilar nations. In spite of its grim prospects, however, the continent remained resilient and even achieved apparent triumph. This victory came in the form of continental unification, eventually evolving into the Eurozone, a union of European nations bound fiscally and economically by the common Euro currency.
This idea of continental unification, offered as an antidote to the horrific violence and discord that plagued the continent, afforded Europe hope for the future. However, in recent years, this beacon of international hope has lost some of its luster. With the intense hostility between Greece and Germany, the communal dream of Europe has withered away, as "the inclusive vision lies shattered today with the acrimony, distrust and internal divisions" (Mundle). The antagonism between Greece and Germany has directly contributed to this mutilation of the Eurozone project. Although "repairing this damage may indeed turn out to be far more challenging than restoring the sustainability of the Greek debt," the damage is not irreversible (Mundle). Europe is wounded, yet it is not defeated.
The goal of the Eurozone is to achieve economic prosperity and diplomatic synergism, not strict international order. Still, Germany's role in promoting financial discipline, despite coming from a nationalistic, "Euroskeptic" position, is conducive to the integrity of the Eurozone project (Young 1). Germany, as the strongest political and economic force in the Eurozone, must assume a leadership role. Chancellor Merkel bears the responsibility "to take this vital action of leadership for Greece and Germany, and also for the world" (Piketty 3). This action, Piketty and his co-authors assert, must incorporate "the bold and generous steps towards Greece that will serve Europe for generations to come" (3). These generous steps include some forgiveness, of the same brand extended to Germany after World War II, to restore hope and return Europe to the roots of continental unification. Although both Greece and Germany have aggravated the rifts in the Eurozone, Germany holds the power to move the continent away from this overwrought condition.
This is not to say that the Greeks have no responsibility in this crisis. Their erratic and volatile behavior in the negotiations, regardless of the imbalanced nature of the bailout agreements, pressures the already strained Eurozone. A move towards responsible, tame diplomacy is in order for the Greeks.
Nevertheless, Germany is called to walk the fine line between continental leadership and hegemonic ambitions in an effort to correct the trajectory of Europe – admittedly a demanding task that will require effort from many different actors. Merkel finds herself, and her nation, in the position of greatest responsibility and scrutiny. As a result of the diplomatic crisis of Greek and German negotiations, the Eurozone has lost the ability to exist as a functional, symbiotic union; with this forfeiture, the relative peace that salvaged Europe and allowed the continent to advance and prosper in the past seventy years is now threatened.
The Greek and German dispute extends far beyond three bailouts, a pile of unpaid debt, and economic debate; it encapsulates a historical narrative of diplomatic tension and conflict between the two nations, and within Europe as a whole. In this crisis, diplomacy supersedes economics. Greek incompetency and self-interested, nationalistic German behavior have turned the continent away from the dream of a united Europe. Ultimately, both nations have contributed to this divergence from the post-World War II vision of European hope and cooperation. Now, the impetus to restore this dream lies within Germany, the greatest power of the fractured Eurozone.
Works Cited
Irwin, Neil. "How Germany Prevailed in the Greek Bailout." The New York Times. The New York Times, 29 July 2015. Web. 9 Oct. 2015.
Krugman, Paul. Interview by Fareed Zakaria. CNN Press Room. CNN, 19 July 2015. Web. 9 Oct. 2015. ‹http://cnnpressroom.blogs.cnn.com/2015/07/19/paul-krugman-i-may-have-overestimated-the-competence-of-the-greek-government/›
Krugman, Paul. "Killing the European Project." The Conscience of a Liberal. The New York Times, 12 July 2015. Web. 7 Oct. 2015.
Mundle, Sudipto. "The Third Greek Bailout: An Assessment." Mint. Jul 18 2015. ProQuest. Web. 7 Oct. 2015.
Piketty, Thomas. "Austerity Has Failed: An Open Letter From Thomas Piketty to Angela Merkel." The Nation. The Nation, 7 July 2015. Web. 9 Oct. 2015.
Young, Brigitte. "The European Sovereign Debt Crisis: is Germany to Blame?" German Politics and Society 29.1 (2011): 1-24. Print.
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