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January 24, 2022

Apocalypse after Greece

The second bailout from financial default of Greece, happening so soon after the first one, within months, could have only raised justified questions. This is actually what happened last week after, on February 20, EU officials had sanctioned a new bailout plan for Greece. All that happened in the now quite regular context of apocalyptic scenarios relative to what might happen if European leaders do not make the appropriate decision, if euro-zone finance ministers do not agree on the amounts still to be delivered to Athens, conditions to be warningly required of Greece, who will be next after its collapse, the price of such calamity for Europe, the future of European integration and so forth. Questions like the above are really justified. Is it possible that the same European decision-makers, who had also awarded the first bailout package, might have erroneously calculated?Apparently they did, since it took a second, more comprehensive one, which poses yet another question: won’t this new bailout, with its huge sums – over EUR 100 bn – be, in turn, insufficient? Is there going to be a third one? If that is the case, shouldn’t we ask the question: Is the conclave of decision-makers sanctioning the bailout packages really competent? Isn’t Europe indeed hopelessly prisoner to a leadership incapable of dealing with the most complicated issue confronting the EU ever since its establishment in the 1950s?These and other questions emerge against a media background mostly specific for the Anglo-Saxon press, which foretell that the measures taken are just palliatives, that Greece is a bottomless bag into which hundreds of billions of euro are poured without a chance of redress, that this is just the beginning of the end of Greece and that Europe is in for some really bad times sooner than expected. Lindley-French, a reputed British expert on European security and integration matters, was stating on February 21: ‘(…) I should be writing about how my Dear Leaders of the Eurozone Onion agreed to Greece having another €130 billion of my money, which I have not got, so that Athens can continue to pretend to reform and that future Greek ‘competitivity’ is more than just an ancient Greek joke re-visited. However, I am so bored by this deceit that I will avail you all of only a summary. The Euro was born of a lie, it is being sustained by a lie and that lie will continue for many years to come. Is that clear?’ And he goes on: ‘What is going to happen? That is easy to predict. Greece will get another bail-out next year before leaving the Euro in 2014 when the firewall to protect Italy, Portugal and Spain …’ American economist and Nobel Prize laureate Paul Krugman was stating on February 27: ‘Why has Europe become the sick man of the world economy? Everyone knows the answer. Unfortunately, most of what people know isn’t true — and false stories about European woes are warping our economic discourse. Read an opinion piece about Europe — or, all too often, a supposedly factual news report — and you’ll probably encounter one of two stories, which I think of as the Republican narrative and the German narrative. Neither story fits the fact.’ Last, to give another example, on February 21, the day after the second Greek bailout, Gideon Rachman was writing on his blog: ‘After the latest Greek bail-out, there is a great deal of focus on whether the new deal is economically or financially-sustainable. The FT’s story on the leaked <downside scenario> report suggests that even those putting the deal together have severe doubts about whether it will stick. But it is not just economic sustainability that matters. There is also the question of whether the deal is politically sustainable? What if the voters simply reject the deal?’In fact, what are these sovereign debt ‘dossiers’ all about, opened not so much in Greece, Portugal, Spain or Italy and France as on the destiny of the single European currency and of the European Union? There are many answers and focussing on just one would mean ignoring the complexity of the matter. It’s not so much a geopolitical divergence between the USA and Germany – the latter trying to turn the euro into a global reserve currency in competition with the US dollar – as it is continental Europe’s attempt to be a new global power pole, sharing that position with already established ones: the US, China, India and BRIC. Many share the view of British Conservative magazine ‘The Economist’ that Germany’s Finance Minister W. Schäuble is seeking to put pressure on Greek politicians to convince them to energetically implement reforms necessary to the local economy, convinced that the current bail-out is not the last one, all with the intention of saving the big European integration project. I would also add that, for that purpose, the gentleman seems to be willing to accept all the unflattering epithets the Hellenic media gratulates him with these days. Quite a few other voices claim Germany is in the envied position as Europe’s most powerful economy because, according to this thesis, ‘siphoning 100 billion a year in trade surpluses from the (Southern) periphery has necessarily led to the failure of those periphery economies.’ In other words, they say that, in order to be in the situation it is now in, Germany has just burdened Europe’s southern periphery with loans in order for its locals to have the money to buy the goods produced by its industry. And that is something that attracts a lot of criticism from the other side: ‘That is absurd. Portugal’s and Spain’s problem isn’t Germany, it’s China. The south Europeans have to understand that they cannot maintain their current standard of living in the context of globalization without significant economic reform. There are great opportunities for those who can adapt to the new realities.’ (K. Rogoff).However, despite so varied answers, what ‘The Economist’ magazine notes draws the attention: ‘But nobody thinks the euro zone has yet overcome the crisis.’  From this opinion we understand that, in order to rescue the euro and the EU, European decision-makers will keep bailing out Greece also in the future, at reasonable costs, of course, in order to keep the pressure up on other endangered economies – Italy, Spain, perhaps even France – in order to force them to reform themselves to match the requirements of the future. So Greece is practically a signal for

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