Famous Dishes
Dominic Lawson writing in The Sunday Times cast his critical eye over the latest EU bailout deal for Greece and rather odd way the Syriza-led Greek Government has set about wooing its major creditor, the Germans.
The whole business would be funny, but for the fact that Syriza fought and won the recent general election on the basis that Greece would never, ever go down this path and that the need to balance the country's spending books had somehow magically disappeared.
Four weeks of Greek hubris, then repulsive humble moussaka
By Dominic Lawson - The Sunday Times
THOSE of us whose childish understanding of the English Civil War came from Sellar and Yeatman’s 1066 and All That have an adage to encapsulate the financial dispute between the Greek and German governments.
The Germans are the Roundheads, “right but repulsive”, while the Greeks are the Cavaliers, “wrong but wromantic”.
Most people tend to identify with the latter: the remarkably good press accorded the leather-jacketed Greek finance minister, Yanis Varoufakis, underlines the perennial appeal of a charming, good-looking southern European — at least as compared with a dour 72-year-old German, his opposite number, Wolfgang Schäuble.
Germans, too, have for centuries found something immensely seductive about the Greek style. These days it is based on the purely hedonistic aspects as enjoyed en masse by holidaymakers. But generations of German intellectuals worshipped the Athenian ideal: hardly surprising as those ancient Greeks practically invented science, philosophy and culture.
This might have been one of the reasons German politicians enthusiastically endorsed Greek accession to the European Economic Community in 1981: to have the distant heirs of the inventors of democracy as a partner nation was seen as a validation of the European ideal. As John Major recalled, when the question came up of whether Greece should be admitted to the eurozone, other nations’ leaders “insisted: you cannot say no to the country of Plato”. But as the former prime minister added: “Maybe not, but every European is now paying the price for admitting an economically unfit nation to compete in the eurozone.”
It is this question of how to make Greece fit to compete within that single currency that preoccupies Schäuble and indeed all the other eurozone nations asked to come up with new arrangements for Athens’s €172bn (£127bn) rescue package. The lenders had insisted this loan remain conditional on continued reforms of Greece’s bloated public sector, its restrictive employment laws and its corrupt system of taxation.
The new Syriza government is resolved to address the latter, but, as for the rest, it won an election committed to a sharp reversal of the economic reforms agreed with its lenders by its predecessors. So it is adding to the state payroll, cancelling the privatisation of its grotesquely inefficient industries, lowering the national retirement age and — in a country with 50% youth unemployment — proposing to increase the minimum wage.
Holger Schmieding, a German economist, might have shocked Newsnight viewers last Thursday by saying that unless Syriza broke “its loony election promises”, it should not expect any more help from the European Central Bank (ECB): surely a government should not break the promises made in its manifesto only weeks after being elected?
The problem is that Greece, by its own choice, does not have its own currency. So if it wants to continue to receive euro loans to pay its civil servants and armed forces, it has to do what other eurozone finance ministers ask: and as about a quarter of ECB funds are backed by German taxpayers, Schäuble’s opinions count much more than those of Varoufakis.
It didn’t exactly help the negotiations that Syriza had gone out of its way to insult the country it most needs to persuade. Within minutes of taking office the new prime minister, Alexis Tsipras, pointedly made his first official act a visit to a memorial for Greek communists executed by the Nazis in 1944.
Because Syriza itself is an alliance of far-left groups, this was in a way understandable. Yet a Greek television commentator at this event observed that its real message was “another ‘up yours’ to the Germans”.
Yet another was the demand from the new government that the Germans pay billions of euros in reparation for the crimes committed during its wartime occupation of Greece. And another was Varoufakis turning up late for his first meeting with EU finance ministers with some sort of personal cameraman in tow.
Given that Schäuble had personally been depicted as a Nazi in Athens newspapers not disowned by Varoufakis, he would scarcely be human if he did not take a certain pleasure in speaking bluntly to his Greek opposite number. That is in any case the German way, which is why so many nations find it less than completely charming. It could only be a German aphorism that “you are lying if you are polite”. Indeed, Schäuble’s biographer portrays him as an exemplar of this, describing him as the “most honest man” he knows, “even if he’s not always the most charming”.
Yet it would be ridiculous to suppose that Schäuble is simply speaking for himself or in the interests only of German taxpayers. Germany is far from the only eurozone country determined not to reward the demagogues of Syriza. Other southern European governments painfully going through their own economic reforms argue that giving in to Athens will not help them one bit.
The Irish government, which has admirably dealt with its own debt overhang by fulfilling the demands of the bailout lenders — and at the same time returned to economic growth — insists Greece should be shown no special treatment. No government has been as insistent on this point as that of Slovakia. Its prime minister, Robert Fico — a former communist — told the Financial Times last week: “This is a red line for us. It would be impossible to explain to the public that poor Slovakia . . . should compensate Greece.”
It is a similar issue for apparently wealthy Germany. Its national balance sheet is healthy, but at an individual level there is no shortage of hardship. The German Federal Statistical Office recently produced figures showing more than half a million German workers were eating a full meal only every other day in an effort to save money. Imagine how they feel when told that Syriza wants a relaxation of Greece’s loan terms, while rejecting the economic reforms agreed unanimously by all lender nations. And especially when they know how successive Greek governments have — to use the technical term — fiddled the figures.
In this context, rather than the one presented by Varoufakis’s adoring fan club in parts of the British media, we can see that the German government represents something much more than a conspiracy of greedy lenders: nothing less than the taxpayers of the eurozone. That is a vastly more significant electoral force than the 36% of Greeks who voted for Syriza.
So it is hardly surprising that Varoufakis has been humiliated. The terms agreed late on Friday involve acceptance that the bailout package continues to be set and monitored by the International Monetary Fund, the ECB and EU finance ministers; and that if this troika is not satisfied with Greek commitment to economic reform, the money will be frozen — exactly what Syriza swore it would never accept. To use the language of the dramatists of ancient Athens, hubris has been followed by nemesis. Or, as Schäuble put it on Friday night with undisguised satisfaction, the Greek government “certainly will have a difficult time explaining the deal to its voters”.
Indeed it will. But if it wants Greece to stay within the eurozone (which, oddly, it does), it will have to — however repulsive that may be.
dominic.lawson@sunday-times.co.uk
