The Greek debt debate is about more than Greek debt.
If it were just about Greek debt, it would have been largely solved already: debt of the Greek state is only 3 per cent of Eurozone GDP, and almost everyone agrees that some sort of further restructuring is necessary to avoid a default, which would be a bad outcome for all Europeans. There is also widespread agreement that crippling Greek recovery with a punitive debt repayment schedule will end up being economically self-defeating, while prolonging a serious humanitarian crisis and posing an existential threat to the Eurozone.
The reaction of many political leaders to the rise of parties calling for a rethinking of Europe’s economic policies seems to be a desire to stamp them out to prove that “there is no alternative”. The firmness of public refusal of Syriza’s demands seems to be designed to show other movements, such as Podemos or Sinn Fein, that popular insurrection will not change decisions in the Eurozone. It is no coincidence that countries such as Spain or Portugal appear as firm as Germany or the Netherlands towards Greek demands.
But the economic policies imposed on Greece are not in the interests of the larger part of the European population at all, and they are ultimately disastrous for everyone asides from a few investors. The Greek people who voted against them have given a wake up call to the European population about this, and so deserve our support.
The idea that Germany and other surplus countries have lent money to countries currently in deficit, which should now pay it back, is only one part of the story. In reality, it was banks that were able to capture a large amount of the surplus value produced by workers from the 1990s onwards due to wage moderation, and lent this money abroad, thereby creating speculative bubbles. The bailouts in reaction to the banking crisis from 2008 onwards served to turn this private debt into public debt, saving primarily German and French banks with European public money. These bailouts also had the effect of turning what was a matter of private debt into ‘national’ debts, thereby creating the impression of ‘national’ competition.
Now it is misguided both for “creditor” and “debtor” countries to claim they have a responsibility only to their own taxpayers, and it is also misguided for the whole debate to be characterized as one country against another: in reality there are winners and losers inside and between each country, and a truly European perspective is necessary to deal with the situation justly.
A discussion which is profoundly political is being dressed up as an economic and technical discussion. All the while, Greeks and others across Europe are being held hostage to lack of political courage and vision by austerity policies designed at best to minimize risks to creditors, and not with the wellbeing or future of citizens in mind.
This strategy of defending the status-quo shows leaders are not looking to the European future. Instead of thwarting popular attempts to influence economic decision-making, Europe’s leaders should be opening a serious debate on economic and political integration of the Eurozone and the European Union more generally, and showing a direction towards integration.
Delaying this political discussion until economically more favourable times – as seems to be the strategy of several European leaders – is likely to have the self-defeating effect of preventing good economic decisions being taken at all, while persevering human misery and mutual distrust in Europe.