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The Case of Greece

The imperialist truth about the Greek crisis and “bailout”
An aid program for Germany's European project

[Translated from Gegenstandpunkt: Politische Vierteljahreszeitschrift 3-15, Gegenstandpunkt Verlag, Munich]

1. The situation Germany has created: A recovery plan anticipating its own failure — why is there such a thing?

After half a year of tough negotiations with the Eurogroup, the Greek leftist government surrenders, ignores the electorate's majority “No” to the demanded austerity policy that it itself had called for in a hastily held referendum, and accepts all the terms for a third "aid program" that were stipulated mainly by the German finance minister, in order to avoid official bankruptcy and being thrown out of the currency union at the last minute. The result is weirdly contradictory. Not only does the Greek government yield to the bailout and push it resolutely through parliament while continuing to declare that it is wrong, not only an impossible burden on the people and the sovereign state, but also counterproductive by thwarting all attempts to get the country's economy back on track. The German finance minister and many of his colleagues who are relentlessly forcing their bailout on Greece make it quite clear that they regard it as ultimately futile, are at best hoping for some marginal improvements, and are extremely reluctant to grant the credit, even though it is basically just going toward servicing Greece's debt, not least with them. They are quite familiar with the questions the pundits raise, like how is a hopelessly unsustainable debt burden supposed to be made sustainable by umpteen more billions of loans that are likely to be just as unserviceable, or what “business model” will let Greece ever escape economic ruin and hold its own in the competition among European countries over the currency. Nobody has the answers. Experts sympathetic to the Greeks and the bailout warn that the crucial recovery measures have yet to come. For the time being, and to all intents and purposes, nothing has been achieved but to push back the deadline for Greece to repay its debt; there's agreement on that. Each detail of the program that becomes known confirms doubts about its chances of success; and none of the people who are fleshing out the program, getting it implemented, and promising constant monitoring feel compelled to refute these doubts.

At the same time, all players are united in their effort to reject the negative judgment about what they are doing. They take pains — most publicly — to get the agreed program implemented and successful, however that is to be measured. They are utterly ruthless, and hardly whitewash it so as to show how hell-bent on success they are. And they actually achieve the desired effect. By focusing on implementing the bailout, politicians create faits accomplis that define what they themselves and the politicizing public are to talk and worry about. Moralists of every shade, know-it-alls with every level of education occupy themselves with mainly skeptical, occasionally optimistic assessments of what the program is doing to Greece, how likely or unlikely it is to succeed, what should be done better in implementing it or instead of it.

What no one bothers with is to answer the question of why there is such a thing: complete political, financial, administrative, moral, intellectual commitment to a project that its makers consider basically without alternative, but at the same time basically pointless.

The answer certainly does not lie in Greece. The reason for the bailout with all its meanness, absurdity, and intractability is to be found in the power that pushed it through and is vehemently insisting that all its requirements be punctually met. But it is not the ideological stubbornness of the “neoliberals” in Berlin; it is not their infatuation with a balanced budget, nor their pleasure in penalizing the insubordinate leftist government in Athens. Whatever ideologies and nationalist stupidities are in play, Germany's national interest in Europe is at stake. This key part of Germany's reason of state has encountered a crisis, since the bankruptcy of Greece as a euro member has made the contradiction in this reason of state manifest.

With its European Union and euro policy, Germany has not merely been pursuing a cause that it might just as well not bother with. This country is too big and powerful to be satisfied with the strength and importance it has achieved. It vies with American world power, under whose protection and aegis it has made its career the past sixty-five years. And it has discovered that its European neighbors offer the opportunity and the means for it to turn the continent into a power “on an equal footing” with the U.S. At the same time, the German state is much too strong and ambitious to pursue the project of a unified European state to which it would ultimately yield its sovereignty, settling for the role of one province, albeit the most important one. It is unwilling to relativize its interest in being the main actor of the pan-European power that is to arise, while it is equally interested in there being a pan-European power structure capable of taking action. The German “solution” to this contradiction is — what else — just as contradictory: to combine a policy aimed at irreversibly integrating its European partners into a “greater whole” with the insistence on having the position of sovereign director that will not submit to the new “whole,” at least not in any really crucial matter. Germany has got extraordinarily far with the common currency, achieving a common European financial power to which the participants have handed over their monetary sovereignty and which looks quite presentable beside that of the U.S. However, this financial power is at the disposal of neither all participants equally nor a higher authority equipped with corresponding competencies, but very much Germany as the strongest economic power.

This combination of a European supra-nationalism with German nationalism has not worked out without contradictions. This became more than manifest when Greece became unable to carry out its duty as part of the euro whole and the Greek government objected to being assigned its inferior role in the euro project by the German director. This is what the political uproar provoked by the Syriza government was really about. All Berlin's efforts to discipline Athens are accordingly at root about conserving the contradictory achievement of the German euro regime which the “Greek case” has jeopardized. It is the German reason of state with its Europe-aimed imperialism that is actually in crisis. Tsipras and Co. were merely the trigger, and Greece is not what is to be ultimately bailed out by the program that Merkel and her finance minister are subjecting it to, each in their place and in accordance with their political professions.

2. The Schäuble case: Germany's fight for the politico-economic principles of a successful world currency

Among his European Union colleagues, and in the European and especially German public at large, the German finance minister acted as the absolute stickler for principles when it came to all the Greek government's wishes and requests. Money could only be had in exchange for reforms which Athens refused de facto and even quite officially by referendum, i.e., it could not be had. Debt relief as requested was not allowed under the binding rules of the euro zone and could only be had if Greece left the euro and issued its own currency, at least temporarily; this would be the only possible way to cure the national economy anyway in view of the country's weakness; this would be the only true and honest way the country could qualify for membership in the euro club…

There was plenty of discussion of the supposed motives for this stance: the principle of the balanced budget, the assumption that new loans to Athens would definitely be at least unproductive if not counterproductive, the unwillingness to burden the German budget and voting taxpayer with new subsidies in the billions; and discussions of its harshness: the Greek people's impoverishment, whether through the reforms or through a new drachma that would make the country unable to import even the bare necessities of life; and of its contradictions: nothing would be gained for the creditors — on the contrary, the loss of bad debts as previously only feared would come true. Every angle was ventilated; was it reasonable in market terms, was it moral for the finance minister to be so hardhearted where European solidarity or at least some charitableness was called for. Among all the pros and cons weighed in the public appraisal of Schäuble and his policy, the principle that he was being a stickler for was somehow overlooked.

Germany — represented very appropriately in this respect by its hardhearted finance minister with his “black zero” break-even budget — wants neither more nor less than a good currency: the euro as a world currency dominating global financial markets on the same level as the U.S. dollar and as a real alternative to the U.S.'s credit-money; a financial power of truly imperialist caliber, backed by half the continent and outdoing and perfecting the global success of the erstwhile D-Mark and Germany's national economy that used it. The German standpoint is that this can be accomplished by the euro — which, in politico-economic terms, is the credit embodied by the euro — only if the states using it as their legal tender (i.e., from this perspective all the EU states) utilize the credit they and their national economies spend for a successful accumulation of capital, thereby making the credit-money created for that purpose the unquestionable embodiment of growing capitalist wealth. The proof that they have managed to do this is considered to be a more or less balanced national budget, not only in the eyes of the “black zero” advocate, Germany, but according to all the stipulated Maastricht criteria and agreements on budget discipline. So the euro states are supposed to use their currency as a means for their national growth — that's what the partners and Germany itself introduced the euro for, after all. But this growth additionally has the overriding purpose of increasing the euro credit's share in international business and thus the financial power of the participating nations beyond the range of their own, merely local currency; and this purpose establishes the crucial criterion for what the euro countries do with the common credit-money. By their growth, they must prove themselves as a means for the common credit and common currency to make it as world money at the level of the U.S. dollar. The member states therefore have the duty not only to strive politically for capitalist growth, but to succeed at it. Failure disqualifies them.

This is precisely the principle that the euro union, under the aegis of the German finance minister, has demonstrated on Greece from beginning to end. However, what Schäuble launched is not merely the negative side of this principle, namely, the exclusion criterion it involves, without ever having been envisaged or codified as such. The failure that has disqualified Greece for the euro — with all the particular causes specific to Greece, from the lack of land registry offices to the political parties' spoils system, that every newspaper reader can now reel off — is the necessary consequence of a credit-money regime that has imposed two conflicting duties on the euro countries. They were required to create capitalist growth, an accumulation of capital on a national scale, which would smoothly yield the credit-financed expenses a state wants in its budget. And this positive, overall balance had to be obtained by all the participants in competition with each other, through successful growth of their national businesses mainly on the common market with its single currency, that is, at their partners’ expense. The effect, that the strong countries accumulate receivables and the weaker ones payables, was in no way canceled out by the fact that quite a few nations’ inevitable deficits were readily financed by Europe's banks because the debts were in stable euros, and that the cross-border loans could be refinanced without any problem via the ECB system so that positive and negative national balances were routinely entered into the books. Instead, the flourishing credit business, which gave the high-export economies bonus earnings, promoted the “inequalities” that in fact increasingly strengthened the growth power and thus the basis for the budgets of the successful countries while undermining those of the losers. And this went on until the banking industry at some point — in the euro zone due to the financial crisis — assessed the financing of the weaker states' budgets as risky and made it accordingly expensive. Then one side was sure that it was mainly the Germans with their brutal competitive strength that was preventing growth in other countries, and, conversely, the world's and Europe's export champions knew that it was the weak partners that weren’t “competitive” enough. And even if each side just thought there was an imbalance that could be overcome with a bit of good will on the part of the ladies and gentlemen in Berlin, if you asked the victims, or with some budgetary discipline and the magic formula “reforms,” if you asked Berlin — the fact of the matter is that they were up against the contradiction embedded in the well-established constraint that all the euro nations have to get surpluses out of the common single market in one and the same currency for a national growth that meets each state's needs.

The contradiction is not only that competing nations functionalizing each other's economies for their own growth and generating surpluses at their partners' expense are all supposed to be successful and thereby contribute to a common overall success — an unfulfillable demand when it comes to the weaker members, which can only lose out in this competition. The much tougher contradiction is that the successful competitors, i.e., primarily the Germans, have made the success of their ambitiously dimensioned project — to use the common currency to grow into a globally decisive financial power — dependent on their partners' contributions to the capitalist justification for the euro as a currency while they ruin these partners with their superior competitive power. This is the result they kept working towards through years of friendly, credit-financed, intra-European trade until the financial crisis blew the cover of the overaccumulation that the internationally successful national economies brought about. In the wake of this, their capital contracted only temporarily; the financial markets directed their critical attention — not without some political instruction from those governing the successful countries — increasingly towards the deficit countries, which have long since accumulated more loan claims against themselves than claims towards their successful partners. The debtors lost their credit; neither banks nor national budget could refinance themselves on acceptable terms or even at all. And their bankruptcy not only eliminated a basis for accumulation in Europe's successful nations and jeopardizes the creditors' claims towards their debtors; it basically overturned the project of a collective world currency based on success on all sides.

The ECB warded off the declaration of bankruptcy without removing its cause. It set the necessary time period for political efforts to rescue the euro project. These efforts were focused most forcefully on Greece. The contradiction that the European nations compete for growth against each other to justify the credit and strengthen the common credit-money with which they finance their capital and their own state power: this contradiction was held against the country that blatantly failed because of it, as the country's own particular failure. Everything was done — even the “no bail-out” rule stretched to breaking point, and credit mobilized to a significant extent — in order to force the success of an at least fairly balanced national budget on the country. If this couldn't be had by growth, which it would have to earn at the expense of its creditors and for which it lacked all the prerequisites, then it would be had by reforms to push the costs for the nation's survival below the proceeds at best obtained from the country's economy. Greece would then, if not prominently contribute to the transformation of euro-credit into accumulating capital, at least not lastingly damage the success record that the euro needs for its global career, and a German Europe needs for its global financial power. Although the calculation was directly refuted by the credit expenses that even this modest result requires, it was asserted as valid by the decrees of the leading power with its uncontested credit.

However, Greece's new leftist government was bent on offensively thwarting this fiction. When it refused to push the pauperization of its people to the point of achieving a “primary surplus” in the national budget (out of which debt could be serviced and paid off), as, for instance, partner Portugal did, thereby earning the compliments of the Union's decisive rulers, the real annoyance for the rescuers of the euro was that Greece was rejecting their fine program of saving the euro, no matter how fictitiously, from the bankruptcy of a euro state, and thus preventing the impossibility of their project of a common currency of competing nations from being laid bare by the definitive defeat in competition of one — perhaps the first of several? — of its member states. It was not merely the leftist ideal of a Europe and euro regime to the benefit of the people that Berlin and other governments held against the Greeks; they were exasperated by the refusal of an offer of assistance whose politico-economic purpose was — and is — to transform the political disclosure of the hopeless contradiction of a collective financial power of competing states into the failure of one particular member, and to thereby ensure the continuation of the project.

The German finance minister responded to the Greeks' refusal by presenting the alternative of having Greece withdraw from the euro zone; this too would be a “solution” in keeping with the contradictory principle that the euro's success comes about as the success of its use by competing euro nations and is therefore incompatible with the failure of a single member. Although this alternative involved the admission that the collective project was contradictory in itself because it necessarily produced losers, the way Germany's finance minister propagated it, the focus was effectively shifted to deciding where to place the blame: Greece was willfully resisting the positive solution, namely, for Brussels to credit and supervise the “re”-establishment of a growth that would justify its credit. The other alternative, which would have "resolved" (i.e., revealed the contradictoriness of) the contradiction of the euro project in the other direction in this exemplary case, was never really up for discussion. It would have consisted in communitizing the debts that weaker members of the Union accumulated to the degree that others one-sidedly made money from them, and thus in abandoning the standpoint of competition between euro partners. Nothing was ever heard beyond the call for more solidarity and the prospect of closer consultation and an additional Community budget, in order to prevent the reciprocal but mutually exclusive claims to success from coming to a head, as in the Greek case, again or at least all too soon. Suggestions of this kind were ignored with aplomb. The German finance minister would at no price give up his position of acting as the master of the situation; or his policy of not letting Germany's national credit be absorbed by a pan-European debt economy, but rather hanging on to it as the determining quantity superior to the partners' dubious deficits; or his national financial power that did not attend to the partners' needs, much less their distress, but rather made use of their — even if rather unimpressive — performance.

What he finally granted some European credit for, after tough negotiations, was to subject Greece to a regime that would not alter the country's unsuitability for actively transforming euro credit into accumulating capital, as really required, but that would maintain the fiction that all the countries were working towards this goal, even making sacrifices for it when their economies were not in optimal shape; that therefore success was inevitable in the long run, so the future career of the euro as an improved, globalized D-Mark could be relied on; and that this is thanks to Germany alone, which was one way or another reliably preventing any great cases of damage through its financial power and its directives for the partners' politics. Greece was being “paid” for its stubborn leftist government to admit and prove, through its harsh austerity policy, that no member of the euro zone could get around Germany's power and authority; Europe therefore had no choice but to confirm Germany's status as the decisive economic power that sets and enforces the standards.

For this proof that Germany's European construct was alive, the 86 billion euros of debt rescheduling and survival aid to Greece was well invested — especially since there was still always the alternative of reacting to a new, manifest failure by eliminating the case of damage, once this had been brought into play as “not unthinkable.”

3. The Merkel case: The struggle for a supranationally integrated Europe under German leadership

In the Greek debt crisis, the German chancellor took command in and over the euro zone. In each phase of the negotiations with and about Greece, what ultimately counted was her vote; simply because Germany's financial power is the basis for the credit that Greece needs to survive as part of the euro zone and that Europe needs for coping with the crisis in general and its policy towards Greece in particular.

There was sufficient, and controversial enough, public debate about Germany's leadership role and how the chancellor performed it. All in all, it was probably a tie between the accusation that she had played off Germany's superior power all too relentlessly and regardless of the consequences, especially her partners' interests, and the verdict that she had managed to achieve the only compromise imaginable and was to thank for keeping the whole continent together. The seesaw of judgments somehow managed to overlook the contradictory interest in Germany's leadership in Europe that Merkel pursued with her own distinctive mixture of adherence to principles and pragmatism when dealing with Greece.

If it had really only been a matter of asserting national interests against others by means of German superiority, i.e., of using all the political and economic power at Germany's disposal to set conditions that subaltern partners had to accept when pursuing their own interests, then Merkel could have spared herself many hours of negotiating with fairly recalcitrant colleagues, disputes with the EU Commission, the French president's objections and claims to mediate, and a lot of other trouble. After all, she was no stranger to how imperialism works today: one knows the national interests of other sovereigns; one knows their need for credit and political support; by serving and exploiting this need, one is involved, to the extent of one's own abilities and according to one's own interests, in these states' efforts to sustain themselves and to succeed, and in a position to impose requirements on their further efforts, which they are solely responsible for coping with. But this is not how it is with Germany's leadership power in and over Europe; there is more to Germany's European imperialism. Germany's national interest aims at a supranational gain in power: economically, at integrating the participating states into a single, big market with its own common currency, i.e., at a continent-wide capitalism that proves its worth as the mighty source of a credit with global punch; politically, at incorporating the sovereigns involved into a state structure acting as a single, unified and powerful political actor. And a great deal of this has already come true, with the euro and in the form of European institutions and agencies with their own powers in various policy areas.

On the other hand, the construction of a supranational European power as designed by Germany includes the preservation of the participants acting as sovereigns on their own authority. After all, their sovereignty is the last thing any of these states, regardless of their caliber, would voluntarily surrender. And the option of taking this ultimate freedom of decision away from a member state, against its will, i.e. with force, is not part of the program of European unification. The member states are supposed to participate out of self-interest, and freely decide to embrace the contradiction of treating their autonomy as a thing to share; of their own accord, they are supposed to transfer sovereign rights in certain areas — gradually ever more substantial ones — to “Europe” without canceling themselves out of this “Europe” as national actors. The supreme authority for all decisions therefore continues to be the council of the national heads of government — who in some matters must bow to majority decisions, i.e., are supposed to waive their sovereign proviso.

Germany, as the leading power, insists on this part of the European construction not merely because it — basically just like all the others — is by no means prepared to give itself up as a sovereign state. For the German side, the precedence of the council of national sovereigns over the “Europe” of supranational agencies has not so much this defensive and negative purpose, but rather a weighty positive thrust. The consensus between the heads of government that counts in the European Council depends on the balance of power among them, i.e., on the ability of the stronger members to autonomously issue decrees and set conditions for the partners' policies, which formally leave them all their freedom but which they have to grapple with, whether they like it or not — in short, this is an arena for blackmail between states. And in this respect, Germany's size and economic power pay off for it. It makes use of them, again resolutely in accordance with its co-opting and unifying program going far beyond such foreign-policy blackmail tactics, as leverage for forcing the partners to cut back on their autonomy: to generally give up their sovereignty while Germany is basically not giving up anything, but rather gaining national importance, because it is clear that its power and national superiority are what count here. Hence above all in matters of money and credit: the German government's decisions set the unignorable facts and guidelines for a policy area whose supranational status the states in the euro zone have agreed on and committed themselves to.

In this manner, Germany is working on asserting itself as the defining actor of a European supranationalism, as the manager with policymaking power over a collective of states whose members have already relinquished a crucial part of their basically indivisible sovereignty. And it has already pushed this contradictory project ahead to a considerable extent and with notable success in the course of the financial crisis and its management. The Berlin government employed its financial power, which was only briefly shaken and then grew all the more in relation to the partners', in order to demonstrate by the example of the weaker member states the limits hemming in the autonomy of national rulers who gave up their fiscal freedom of action together with their monetary sovereignty — while Germany gave up nothing at all. Germany is de facto the power that not only dictates decisive conditions for governing with the power of money to the partners, but is also able to prescribe the budgetary handling of these conditions of their rule; this was made clear by the chancellor when she established the corresponding power relations within the euro zone with her politics.

This is what the leftist Greek government was violating when it refused to go on governing the country as an order manager with the loans of the euro partners and by the rules of its creditors. The breach of trust it was accused of — after having its people, the “true sovereign” according to democratic doctrine, confirm its refusal to lose sovereignty in exchange for credit — had nothing to do with alleged ploys, but consisted in the decision to remove itself and thus a euro member country from the supranational regime that had already taken effect, and was to take more drastic effect, with encroachments on the nation's budgetary sovereignty and the obligation to adopt a euro-serving restructuring program under German control. This was not a violation of some diplomatic virtue; it challenged the quality, i.e., the binding force, of the euro alliance, of the distribution of power and responsibilities within this alliance — precisely the euro-imperialist achievements with which the Union and its leading power made the German chancellor's announcement come true, that "we would emerge stronger from the crisis than we went into it.”

Performing Germany's leadership role, Merkel took action against this violation. With relentless blackmail and a matching gruff, diplomatic style, she consistently and emphatically demonstrated on Greece the principle that membership in the euro club means passing the point of no return: integrating in this community is irreversible. Surrender of the nation's monetary sovereignty, submission to the requirements of the collective credit-money and its maintenance: these cannot be rescinded even if it means a country has to undergo an at least medium-term contraction program. It was a joke that the chancellor's insistence that euro membership was irreversible was actually interpreted as a toning down of her finance minster's alternative of — temporarily — excluding Greece from the euro zone. At the same time, Merkel did everything to make clear that Greece was not handing over the rule over its politico-economic fate to a new, really supranational pan-European sovereign, which it would be permanently subject to just like all the others, but to a rather impersonal construction (the “institutions” or else, instead of the old “Troika,” a new “Quadriga”) backed by Germany as the determining entity.

For this proof of Germany's leadership, the Greek case and the prime minister's final capitulation were far less important, however, than the fact that Merkel did not stand alone with her blackmail ultimatum but had the French president at her side, who had acted as the decisive mediator and grandstanded copiously. That France was willing, as a second ambitious leading power, to participate in imposing on the euro zone countries the supranational regime dependent on and confirming Germany's financial power was key to the success that is decisive for Germany's European policy, namely, that all participants accept this regime as being without any alternative; even when — as exemplified by the Greek case — it called for sacrifices in terms of not only a nation's material means of survival but also its autonomy in areas previously respected as sacred. Germany needed France's consent for its contradictory construction of an integrated Europe that first and foremost “globalizes” Germany's economic power and resulting political power. Hence, the crucial task and practical test of Germany's European imperialism consisted in exploiting the dependency of this big partner and rival on the attained level of “European unification” — i.e., on the single market and common credit-money — to co-opt France and set it on the course laid down by Berlin. And this was exactly what the negotiation fight that the German chancellor, supported by Paris, waged with the Greek prime minister was really about: functionalizing France to stave off Greece's refusal, which Berlin crucially saw as no less than an attack on Germany's financially-grounded and virtually objectively necessary authority over Europe.

What this European policy did to Greece, what credit plus reforms meant for the country and its people, was of very little interest from a euro-imperialist point of view. What was rescued by the “Greek rescue” for the time being was the contradiction that is so essential for Germany, namely, the construction of European world power in the form of an irreversible union of otherwise autonomous states: a collective in which Germany is not one of many, but acts as the final decision maker and assigns the partners to their places with the right of its superior financial power. And that is the political success that Europe is really financing with the 86 billion euro loan for Greek debt service and reconstruction that was granted at the chancellor’s word of command.