The Wehrmacht had a crack at it – but that attempt ended in disastrous failure 70 years ago. The long-held dream of German hegemony throughout Europe is, however, back on the agenda and closer than ever to realisation.

The Greek crisis threw up many sub-plots – many of them of great significance of course to the Greeks themselves. But the real story of the Greek crisis is one of much wider import. It has stripped bare to the public gaze just where the pan-European project is really heading.

What we have witnessed over recent months is a painful lesson being handed out to the Greeks – but even more importantly to the rest of Europe. Opinions may differ as to how responsible the Greeks may be for their own plight but what is now clear is that being part of “Europe” does not allow for any back-sliding if events move against you.

So, the Greeks – having already being forced to accept over several years the most destructive of austerity packages – have not only been compelled to accept yet another instalment but have also been stripped of their powers of self-government and of democracy itself.

The bail-out deal forced through the Greek parliament at the behest of European creditors makes absolutely no sense in economic terms. Even the IMF agrees that it makes it impossible for the Greeks to produce the resources needed just to service, let alone repay, their debts; and that is both totally unreasonable and lacking in reason, not only for the Greeks but for the creditors themselves.

But it is the geo-political consequences that are most worthy of note. The Greeks have been treated with scarcely concealed contempt. They have been deliberately and ruthlessly humiliated. The wishes of the Greek people and of their elected government have been over-ridden by external forces who have no concern for their welfare.

The Greeks have suffered this fate, not because they are uniquely culpable, but “pour encourager les autres”. The message has been deliberately designed for the rest of Europe. It is addressed to all those other small and medium-sized members of the euro zone who have suffered under the austerity regime forced upon them. The message is stark – there is no escape.

Any country that might contemplate, as an alternative to euro-austerity, the reclamation of the powers of self-government and monetary sovereignty will be ruthlessly cut adrift. Even the Greeks, benighted as they are, could not brave that fate. The euro-zone is quite evidently a straitjacket, centrally applied and disciplined, whose rules over-ride democracy and the interests of ordinary people.

And who or what, exactly, runs this arrangement from which there is no exit? It is German economic power. The troika of the IMF, the European Central Bank and the European Commission may look comfortingly like a European or even international authority, but the levers of power are actually moved by the German government.

One of the most significant aspects of this unfolding landscape is the extent to which the Franco-German duumvirate, which we used to think actually called the shots, has been left in ruins. The Germans have felt no inhibition or compunction in letting it be seen that it is their view that must prevail. It is a measure of growing German confidence that they could quite publicly reject the preference of their erstwhile partners for a softer approach, and focus instead on giving overt priority to what they see as German interests.

The mailed fist is now clearly visible. Any country in the euro zone that steps out of line will find itself forced back, with its own government and parliament sidelined and left impotent. There can be no debate. There can be no alternative to austerity; neo-classical economic policy and continued stagnation at best is, by decree of the German government, the only option.

The German goal is to establish German hegemony across the whole European economy by ensuring that the policies framed in Berlin are adopted and applied across the continent. They have not found it necessary to fire a shot. But the way forward is not without its risks and casualties.

Any misapprehension about how Germany sees its role in the new Europe has now been dispelled. German ambitions will henceforth be looked at much less tolerantly, and will meet increasingly strong headwinds. Angela Merkel’s confidence that she no longer needs to dissemble about those ambitions will certainly be put to the test.

More importantly, the European ideal has been seriously compromised. A Europe revealed as simply a vehicle for German power is a very different entity from the force for peace and unity which has been sold to us so far.

Europe over many centuries has faced the problem of restraining whichever was the dominant power of the time. They have usually succeeded, one way or another. That is unlikely to change. The Greeks will not be the only ones to pay a price for their bail-out. Europe’s future, too, is now more clouded and uncertain.

Bryan Gould

17 July 2015

As the Greek crisis unfolds, we are constantly informed by the world’s media that the European power-brokers will agree to a further bail-out only if Greece implements a programme of “reforms”. Most people will see this as confirming their understanding of what the crisis is about. The Greeks, it seems, have mismanaged their economy; so what could be more sensible and reasonable than to insist, as a condition of any further help provided to them, that they should improve their economic management? And, if they refuse to “reform”, surely they have no one to blame but themselves?

The constant use of the term “reforms”, however – no doubt seen by the media as a neutral and objectively accurate term – is nevertheless grossly misleading. It reflects a view of the crisis that is very much that taken by the Germans and their client states, but is a long way removed from what is really at issue. It has become a real obstacle to a clear view of the causes of the crisis and of the only realistic way forward.

When the Global Financial Crisis (for which the Greeks had little or no responsibility) exposed the frailty of the Greek economy, and the level of indebtedness that they had been allowed and encouraged to take on as the price of living with the euro, Greece found that they were unable to repay their creditors. Those creditors agreed to bail them out, but on condition that they put in place a programme of “reforms”. The Greeks had little option but to agree.

Some of the “reforms” were long overdue, and addressed some of the obvious failings – the inefficiencies, the slackness, the unduly generous social provision, the tax evasion – that had characterised Greek economic management. But many others were designed to impose on Greece the kind of austerity measures that the euro zone leaders had insisted on as a response to recession and which – it is now clear – have condemned the European economy as a whole to a prolonged stagnation.

Those measures had a particularly direct and damaging effect on the Greek economy. Public spending was cut, pensions and other benefits reduced, tight monetary policy introduced, bank lending fell. As many warned at the time, it was hard to see how a weak and uncompetitive economy that had run up large debts and that was now required to take on the burden of repaying them could hope to do so if they were at the same time obliged to adopt policies that ensured that the economy got smaller.

And so it has proved. The entirely predictable outcome of the “reforms” made by the Greeks has been that their economy is now 25% smaller than it was and unemployment has soared. Their ability to service and repay their debts is much reduced. But none of that seems to worry their taskmasters; they insist on yet another round of further “reforms” as the price of extending the bail-out.

The extraordinary aspect of this is that the course insisted upon by the creditors is not even in their own interests. The “reforms” they demand can only reduce still further the Greeks’ ability to repay what they owe. With the best will in the world, the Greeks will find that – after a few more years of “reforms” – they are yet deeper in the mire.

So what is really in play here? The answer lies in ideology. There are, after all, many precedents in recent times for what the Canadian writer, Naomi Klein, in her influential book The Shock Doctrine, has described as “disaster capitalism”. Countries faced with natural disasters or political paralysis or economic collapse, and that need as a result to ask the IMF or some other agency for help, have all too often been required to put in place what are usually called “structural reforms” as the price of that help.

So, countries like Chile, recovering from the turmoil of the Pinochet dictatorship, Argentina, Bolivia, Uruguay, Poland, and Russia, have all found themselves obliged to implement policies of privatisation, deregulation and savagely reduced public spending in order to qualify for help. In each case, the results have been the same – economies where inequality widens rapidly, the fat cats make large fortunes overnight and ordinary people suffer poverty and unemployment.

It is not just economies facing specific crises that have fallen victim to “disaster capitalism”. When the Japanese economy stagnated in the 1990s after several decades of rapid growth, the remedy prescribed by western experts was “structural reform”. But, as Professor Richard Werner of Southampton University and a former Shimomuran Fellow with the Bank of Japan has demonstrated, the nostrums so dear to the hearts of neo-classical economists failed over more than two decades to solve the problems but instead entrenched them. They have now been abandoned by Shinzo Abe’s government.

What we are witnessing in Europe is, in other words, a triumph of ideology over common sense and constantly repeated experience. As always, the price for these mistakes is paid by ordinary people. Reforms? I don’t think so.

Bryan Gould

13 July 2015

Like so many others, I long ago got used to being pilloried as “anti-European” for daring to say that the “Europe” we were urged to sign up to was no such thing, but was a particular arrangement cooked up by the powerful and foisted on the people of that often benighted continent without bothering either to consult them or to take count of their wishes.

As the Greek crisis unfolds, and as it strips bare the pretensions of those powerful forces who talk with less and less conviction of the European ideal and of democratic rights, we can surely no longer be in any doubt. The “Europe” in whose service so much sacrifice is now demanded is a cartel of bankers, financiers and right-wing politicians who have no interest in democracy, or jobs, or the living standards of ordinary people. As the Greek people suffer, and plead “no more”, it is not the travails of the Greeks – or, for that matter, the Spanish, or the Portuguese, or the Italians – that weigh with Europe’s powerful; their sights are fixed on maintaining austerity and discipline, on adhering to ideology and doctrine.

Above all, they are determined to protect the euro, because it is the one weapon that ensures that there can be no backsliding. The euro was put in place so that, whatever temptations – or even imperatives – there may be, there can be no going back. The grim and unrelenting disciplines of neo-classical economics demand nothing less.

For many of us, this imposition of a single monetary policy and discipline on a hugely diverse European economy was always destined to fail. There was no way that small and underdeveloped economies like Greece could survive competition from a powerful German economy, especially when it was the Germans who had the power to decide on the monetary policy that should be put in place – and no prizes for guessing whose interests that policy turned out to serve.

The irony is that is those powerful interests – represented by the IMF, the European Central Bank, and the European Commission and obliged to follow the dictates of the German Finance Minister – who now find that, despite the disparity in power between them and a bankrupt and demoralised Greece, it is they – and not the supposedly feckless Greeks – who have the responsibility for saving the euro.

With the power of the referendum result behind him, Prime Minister Tsipras can now say that there is nothing more he can do. Ravaged by austerity, Greece has no resources left. Unless they are helped by a bail-out package that does not drive them deeper into collapse but instead gives them a chance, over time, to begin to grow again, they will be forced – since there is no other option – to leave the euro and seek their own salvation.

The Greeks have, in other words, taken their decision. There is nothing left for them to decide. The ball is now in the court of Europe’s leaders. It is nor fort them to give up entrenched positions. It is up to them to decide whether to refuse to help, with the result that Greece will have to leave the euro whether they like it or not, simply to survive, or to relent and offer a more acceptable and realistic package that will keep Greece afloat and allow them to stay in a re-shaped common currency.

We know what they want to do. They have stuck to the current stance in the hope that the Greek government will fall and “regime change” will be brought about. There has even been talk of a government imposed on the Greek people from outside or of a government of “technocrats” that will do the bidding of the financial establishment. The referendum result, though, seems to have put paid, for the time being at least, to that disgraceful objective.

But, for a brief period, the Greek crisis has given us a glimpse of the mailed fist and doctrinaire rigidity behind the “European” ideal. Rarely can there have been such a stark demonstration of the inherently undemocratic nature of the European power structure and of the interests it truly serves.

It may be that the Greeks, by forcing an “agonising re-appraisal”, will end up having done the true adherents of a united Europe a favour. It may be that, at long last, we will begin to contemplate a Europe based on agreement freely given by the continent’s governments and peoples, an agreement to build a Europe by learning from each other how to work together and to cooperate more closely, a functional Europe that will do those things that are best done together rather than separately, a “bottom-up” Europe that will develop as a result of, but not getting ahead of, a growing sense of European identity and the wishes of its peoples.

We need a Europe, in other words, that is not just a vehicle for advancing powerful interests, and riding roughshod over everyone else, but that understands that the Greek poor and unemployed are just as important, and just as essential, to Europe’s future, and that enabling them and millions like them to live a better life is both a united Europe’s true purpose and its only real chance of success.

Bryan Gould

6 July 2015.

Most people will feel that they don’t need to look far for an explanation as to what lies behind the Greek crisis. Lazy reporting and racial stereotyping will persuade them that the Greeks – a feckless lot, no doubt – have spent more than they should, got into debt, taken out loans from the hard-working Germans and now won’t repay the loans because they refuse to tighten their belts.

But there is another narrative that tells a somewhat different story. That story is one of a powerful economy enforcing its will on its weaker neighbours and refusing to acknowledge that it has thereby made it impossible for them to dig themselves out of a hole.

The story begins at the turn of the century when the Greeks, along with many others, were persuaded that being part of Europe required them to give up their own currency and accept the euro. A single currency meant a single monetary policy and a single central bank – and guess who decided what that policy should be and what the central bank should do?

Germany, by far the most powerful economy in the euro zone, ran it to serve its own interests, but life wasn’t so easy for the weaker countries. The Greeks, for example, with their smaller and less developed economy, had no chance of surviving the competition from efficient German manufacturing. We do not need the benefits of hindsight to make this point, since many commentators, myself included, foresaw the inevitability of this outcome at the time.

As things began to go wrong, and they had to borrow to keep their heads above water, the Greeks were assured that they could look to the Germans and others to help them out. But this was in the days of cheap and plentiful credit; when the Global Financial Crisis struck and the cheap credit dried up, the creditors who had happily lent to the Greeks wanted their money back.

The Greeks didn’t have the money. But the price they had to pay for borrowing yet more from the IMF and the European Central Bank was to accept a programme of savage austerity. The cuts they have already been forced to make have meant that 25% of the Greek economy has simply closed down and 60% of young people are without a job. Again, as some commentators observed at the time, it was impossible to see how the Greeks could ever – from an already weak economy that is now so much smaller and still going backwards – find the resources needed to repay their debts.

And so it has proved. The price that creditors insist upon for a continued bail-out is yet more austerity which can only mean yet more closures and unemployment. Leaked papers show that the creditor institutions themselves recognise that more austerity will make it even less possible for the Greeks to pay back their debts.

So why are the Germans and other creditors determined to force the Greeks into such a damaging dead end? The answer is that they care little for the travails of the Greek people. Their focus is on those countries that are watching the Greek situation closely – countries like Spain, Portugal, Bulgaria, even Italy, that have faced similar problems, and suffered similar penalties, but that have not yet been compelled by pressure from their populations to resist a further descent into even more austerity.

The fear from the financial establishment and from the Germans in particular is that the Greeks might find a way to demonstrate to other similarly afflicted countries in the euro zone that there is a way out – and that those other countries would then follow a similar course. The rational course for the Greeks to take, after all, would be to leave the euro zone, restore their own currency and then print the drachmas needed, as monetarily sovereign countries are able and entitled to do, and repay their debts in devalued drachmas.

The difficulty that Greek Prime Minister Tsipras faces is that he has committed to resist austerity but also to retain the euro. It is doubtful that he can achieve both. In the forthcoming referendum, no one can be sure whether the dislike of austerity or the fear of leaving the euro zone will prevail. The poor and the unemployed – those who have suffered most from austerity – will vote to reject the new bail-out offer; the holders of assets and the pensioners will vote to stay with the euro.

Either way, the outlook for the euro looks bleak. In the long run, the attempt by the financial establishment to over-ride the wishes and interests of ordinary people and to negate the power of a democratic government to protect them will fail. The only question is as to how many more crises there will be and how much more suffering has to be endured before common sense prevails.

Bryan Gould

2 July 2015.