Let's tell it straight: "Europe" committed suicide last weekend in Brussels. It was an assisted suicide. The IMF wrote the original story line and set the scene; the European Central Bank provided the revolver and ammunition; while Germany unrelentingly urged that the suicide was a necessary act of moral redemption that was imperative to save the EU from eternal damnation. This was a psychodrama of historic proportions. At the end, the blunt truth is that "Europe" is now dead -- a memory for the ages.
"Europe" as an ideal, "Europe' as an aspiration, "Europe" as a community of peoples bound by a common identity (if not an overriding one), "Europe" as a potential enlightened player on the wider international stage, "Europe" as a mutual aid association, "Europe" as a model -- all those "Europes" are gone. Yes, the elaborate structure of institutions remains; the dense mesh of formal rules and regulations still pertain; technocratic Europe is an indelible part of the continent's economic and social fabric -- with or without a faltering Britain likely to sail away into its own private dreamland. What is gone are the sentiments of solidarity, the ensuing comity of outlook, the ingrained habits of cooperation -- the intangibles. Without them, that imposing superstructure is like a skyscraper built on shifting sands, in danger of toppling when the next big shake comes.
This was a collective suicide involving several persons. They were a mixed lot. The main protagonist in the last act was Alexis Tsipras, Prime Minister of Greece and head of the insurgent Syriza Party whose victory in the December elections stunned the financial and political establishment from Washington to Frankfurt and Berlin by posing a seeming challenge to their draconian rule over the economies of the European Union. Syriza rejected the severe austerity imposed on Greece, its underlying flat earth economics, and the demands that the country's market socialist regime be replaced by a Salafist version of neoliberalism -- one that entailed the selling-off of public assets to bail out the foreign private banks who were Greece's ultimate creditors. Tsipras, and therefore Syriza, has proven to be a paper tiger. The talk was brave, the gesture of a referendum powerful theater, but Tsipras had not the conviction and above all the courage to be a leader in battle. Faced with the arrayed forces of the Troika and the financial powerhouses they represent, Tsipras knew from the outset that he would cave in were Athens' request for a rewriting of the terms of their contract rejected. When predictably the request was thrown back into his face, he didn't have the intestinal fortitude to test his mettle amidst the stormy seas of an exit from the Eurozone.
Tsipras is a soft man -- not someone ready to sacrifice convenience, comfort and career for a noble cause. His opposite numbers read him correctly. As the crisis mounted, he had sent them repeated signals that he was looking for a way out: the last minute offer of concessions even after the referendum had been called; the discomfort at the resounding "No" that sent him scurrying for the protective cover of the "Yes" promoting opposition; the parting of the ways with Varoufakis. Indeed, over the preceding six months, Draghi, Lagarde, Dijsselbloem, Schauble and Merkel had taken his measure and realized that he was more lamb than lion. Come the climactic post-referendum negotiations, they had their knives out and sharpened. His verbal temerity in company with his timidity under pressure made some (the Germans) lust to extract the last ounce of blood -- from him and from Greece.
Unintentionally, Tsipras had acted as the Judas goat. The Greeks were led to a worse fate than any they had imagined -- by a route that 61 percent of them thought they had rejected in the referendum vote. There is no reason to mince words: they were betrayed. Democracy was betrayed. Tsipras added insult to injury when, on his return to Athens with an accord that in effect pronounced Greece's death sentence as a sovereign country, he declared that his government had salvaged Greece's future by ignoring the mandate of the referendum vote -- the very mandate that he had arduously campaigned for.
This rightly harsh judgment of Tsipras as facilitator of Greece's humiliating subjugation should not obscure the vindictive acts of the others who pronounced sentence and imposed the penalty -- all the while blindly ignoring the consequences for Europe and, ultimately, themselves. Led by Germany in the persons of Wolfgang Schauble and the overshadowed Chancellor Angela Merkel, the Troika inflicted punishments that went beyond all previous austerity programs. They served no rational economic purpose -- as the IMF staff itself had to admit. They became punishment for punishment's sake; for defying the will of the global financial combine. Varoufakis called the terms "a new Versailles Treaty." That is not quite accurate; for some of the terms are more onerous than those imposed on Germany after WW I.
The grossest offense is a forced sell-off of national assets valued at $50 billion to be placed in a fund managed by external parties, which is dedicated entirely to repay private banks and other financial institutions who have bought up Greek debt. (The equivalent for the United States, on a proportionate population basis, would be $1.6 trillion, transferred to foreign banks, from coerced sales at bargain prices of American ports, airfields, military bases, bridges, toll highways and choice real estate. Taking account of differential GDP as well, that comes to something like $4 trillion). The "trust fund" ploy tore aside the veil concealing to whom the actual beneficiaries of the bailout credits (that Greece is being forced to repay in full) have gone to. It is primarily the private banks, not the citizens of Germany and other states that are the official creditors.
Popular anger, thereby, was diverted from the financial behemoths to Greece and the Greeks. That created a powerful political dynamic whereby heated rhetoric directed at "lazy and freeloading" southerners became a staple of public discourse and political debate. No alternative narrative has any standing in Germany.
For Merkel, this has been a cool-headed political calculation reinforced by her adherence to a rather primitive form of neoliberal economics. Like many politicians from the former Soviet world, she operates within a dichotomous worldview that has Lenin and von Hayek as the two magnetic poles. Schauble is a more interesting case -- not in terms of how sophisticated his economic thinking is, but in terms of personality. The wheelchair-bound finance minister was the victim of an assassination attempt in 1990 that left him paralyzed. Evidently, he harbors a bitterness about his life's misfortune that finally has found discharge in violent denunciation of Europe's debtor nations. His moralistic calls for pain and penance resemble those of preachers berating a congregation of lost souls for their sins. Schauble, indeed, has received cruel blows of fate -- physically and in being outmaneuvered by the clever lady from the DDR who usurped his role as heir apparent to Helmut Kohl, who admired and supported him until Kohl's sudden fall from grace.
Throughout the multi-year Eurozone drama, Schauble played the heavy inside the German government with Merkel leaning ever so slightly against his unyielding pressure. When the Greece crisis broke, Merkel gradually yielded the limelight to Schauble. In the climactic two weeks, Schauble was the voice and face of Germany. It was an angry, vindictive face. The challenge from Varoufakis was taken personally -- at the intellectual and individual level. Style has something to do with it -- a contrast perhaps accentuated by the robust and virile persona of Varoufakis. At the concluding meetings where Greece's punishment was doled out, Schauble became a wild card driven by emotion as much as mind. Unrestrained by Merkel, he lost control. At one point he screamed at ECB Director Mario Draghi: "I am not an idiot." Draghi had merely pointed out that the debt was arithmetically un-payable given the new conditions that Germany wanted to impose. That exchange nearly brought the talks to a collapse as both the Greeks and Germans seemed prepared to leave the room with a Greek exit from the Eurozone inescapable.
Chancellor Merkel bears the main responsibility for the Schauble pyrotechnics. A statesman or stateswoman, at a moment of crisis, does not hide behind a subordinate -- particularly one prone to volcanic eruptions.
In this squalid drama, supporting roles were played by Francois Hollande of France and Matteo Renzi of Italy. They were shocked by German vindictiveness and worried that a bust-up might imperil the Eurozone's stability via volatile financial markets. They also shared anxiety about the likely impact on their own fragile economies and their fragile political standing. Hollande pushed France forward in the envisaged role of mediator. He had sent experts from Paris to Athens to help the Greeks shape their proposals (in effect, terms of surrender) in terms that stood a better chance of placating the Troika. In Brussels, he proposed easing the German demands at the margins. The net effect was insignificant.
Hollande had three motivations. One, any French President feels compelled to take a high profile whenever on the international stage -- especially a European stage. Two, he -- like France's entire political class -- has a stake in perpetuating the image of a Franco-German partnership acting in concert to manage the European Union's affairs. That is a dated conception no longer consonant with reality -- as the recurrent monetary crises have demonstrated vividly. Nonetheless the myth must be kept alive for domestic political reasons. Hollande's political standing and reelection prospects were the third reason for his largely futile efforts to insert France into the Greek-German confrontation.
Hollande had had his own bruising encounter with International Finance Inc. Running on an anti-austerity platform in 2012, he juxtaposed a growth oriented strategy to the prevailing European orthodoxy. A few colleagues went so far as to toy with the idea of teaming up with Italy to form a countervailing bloc. All was quickly abandoned within days of Hollande's entering the Elysee. A small group of French banking leaders representing the country's largest financial institutions told him in no uncertain terms that a serious initiative that entailed looser financial policy would trigger a sell-off of French bonds and a hike in interest rates for loans to cover the national deficit. They emphasized that this was not a "threat' but rather a prophecy -- a la the Delphic oracle of Greece. So it was good bye to all that.
None of this made much difference. One diplomat put it in pithy words: "The Greeks were crucified." For his efforts, Hollande wants to be esteemed as Europe's Prince of Peace and the Savior of the Euro.
What roles were played by the ECB's Draghi and Lagarde from the IMF? For them the overriding objective was to avoid a Grexit from the Eurozone. For that might have unforeseen consequences detrimental to the smooth workings of global finance. Lagarde had been embarrassed by the leaked IMF documents showing unmistakably that the Greece's debt burden was unsustainable; hence, the parameters of the deal on the table were arithmetically absurd. Draghi was the one who could provide emergency financial services either to prevent a total bank collapse in Greece in the event of a Grexit or to paper over the gaps in the German sponsored plan were it accepted by the Greeks. Schauble's emotionalism in pressing for vindictive penalties jeopardized the ECB's aims and objectives.
Draghi and Lagarde are two cool-headed international technocrats in service to the international financial community. They behaved accordingly.
The implications of the great Grexit drama are profound. Most obviously, Greece has been reduced to the status of an indentured servant of the financial powerhouses. There is no logical way that it can escape in this generation. In the process, it has lost its sovereignty for all practical intents and purposes. It also has seen its democracy severely compromised -- this in a country that has struggled to build and sustain viable democratic institutions since WWII. This is a humanitarian tragedy, above all.
The systemic consequences are even more profound. Germany has demonstrated that it is unprepared to exercise enlightened leadership in Europe. The Eurozone is its creation, serves German economic interests, and depends on sagacity in Berlin for guidance. The last is manifestly lacking. Merkel does not understand the meaning of international leadership. It goes beyond clever political maneuvering at home to stay in power; it goes beyond securing short-term national interests; it goes beyond stroking one's pet ideas and maintaining ideological purity.
A benign hegemon bears the responsibility to create public goods for the collectivity it oversees. That means order, stability and taking into account the peculiar needs and circumstances of its dependent members. At times, doing so means making minor sacrifices of one's own narrow interest for their sake and for the sake of the common enterprise. It means valuing persuasion over imposition. Leading with a light touch is all the more essential when the differentials of power are relatively small and the leader's position derives from no exceptional sources of authority. All of this is alien to Merkel's mindset -- and evidently that of the German political class generally. That's odd given that Germany has been the greatest beneficiary of such leadership as exercised by the United States for more than half a century.
Moreover, Germany's political class has revealed a matching parochialism. An important ingredient of that parochialism is an unseemly emotionalism. Public discourse is permeated with self-pitying complaints of victimization. The psychology of this is difficult to penetrate for an outsider. Objectively speaking, it is the Greeks who are suffering as victims -- not the Germans. Nor is there any historical basis for portraying the Greeks as Germany's victimizers. Quite the reverse. Of course, the fictional story crafted by Merkel et al that has the Germans giving the Greeks a gift -- which those ungrateful layabouts refuse to repay -- plays into this psychological syndrome. Still, many leaders do know the facts and yet still manage to work themselves into a lather over alleged Greek duplicity.
This attitude is not a German exclusive, although the moralizing and self-righteousness is most pronounced there. Similar sentiments are heard on the lips of government officials and commentators in the Netherlands, Finland, Austria and elsewhere. Oddly, the first two countries themselves have fared badly in economic terms from the self-administration of the austerity snake oil. Finland's GDP is 7 percent lower today than it was in 2008 -- at the bottom of the OECD world standings. What is more important to these countries' leaders is that the neoliberal theology be preserved and that the neoliberal Church retain its authority.
None of this is comprehensible without emphasizing how the triumph of neoliberalism has transmuted postwar Europe's enlightened creeds in ways that endanger both domestic well-being and the European project of which it is both cause and effect. For the tenets of neoliberalism are antithetical to the ethos and principles that have created today's Europe (and today's "West" overall). For one, it exalts the individual while denigrating the communal. Personal welfare is praised, policies directed at the public welfare are disparaged or neglected. It posits a me vs. you, a we vs. them, conception of social relations. It emphasizes the preferential over the mutual. Two, that encourages stereotyping and condemnation of the losers: the poor, the weak, the dependent. This process has proceeded even further in Britain, not to speak of the United States, than it has in continental Europe. The direction and momentum are obvious, though. The stereotyped "them" has not taken on the extreme xenophobia that came close to destroying Western civilization in the first half of the 20th century. There are too many countervailing factors in the equation. However, it is manifesting itself in coarse treatment of the aliens within, i.e. immigrants. The combination of acting only in accord with narrow self-interest and avoiding sticky European problems has been manifest in the inability of the EU to agree on a joint approach to the refugee crisis. Thus, Italy finds itself being treated with a disregard that resembles the fate of the Greeks.
In the context of these developments, it is wholly natural that there should be similar hardening of attitudes toward the weaker and poorer members of the European Union. There is the same pinched attitude in defining self-interest, the same selfishness masquerading as righteousness, the same proclivity to destroy rather than to build. Above all, the same tendency to dehumanize and to depersonalize the other in justification for doing what one feels entitled to do.
Europe of the EU will survive the death of "Europe." It simply will be a nastier place.
The night of July 12-13 -- the "night of the long knives" -- is destined to haunt a soulless Europe for many years to come.