Greece is no Germany

IN SPITE of getting a collective cold shoulder in Berlin, Paris, Brussels, Frankfurt and Rome last week, the new Greek government of Prime Minister Alexis Tsipras has indicated that it is pressing on with its refusal to continue to follow the austerity demands put by the European Union (EU), the European Central Bank (ECB) and the International Monetary Fund (IMF).

In fact, in his first speech in the Athens parliament Tsipras defiantly said that Greece would not accept the extension of the international bailout which had kept the country from falling into an abyss since 2012, as the price was too high. (The bailout would in any case have had to be renewed at the end of February, as it runs out then.) Instead, he announced that he would seek a bridging loan to give him time to negotiate a new deal.

This has already been given the thumbs down in most capitals, but what is especially interesting is some of the arguments put forward by Tsipras. As Germany, the most powerful country on the continent, hitherto was the main moneylender, the Greek leader referred extensively to German history.

His argument more or less runs like this: after World War I, Germany was slapped with war reparations totalling 132 billion Reichsmark which, according to some, would today be worth some $436bn. This was clearly hopelessly too much for a Germany impoverished by the war, and the amount was successively lowered until Adolf Hitler simply cancelled all payments when he took over the government in 1933.

After World War II, the victors at first demanded that the payments be resumed. However, in 1952-53 a big debt conference was held in London. After some tough negotiations, the victors acquiesced to forgiving half of the debt – about 65 million Reichsmark, or 65% of Germany’s gross national product in 1953. The last reparations were finally made as late as October 2010.

Tsipras made the point that the excessive debt burden on Germany directly led to Hitler’s rise to power. His Minister of Foreign Affairs, Yanis Varoufakis, alluded to this too when he told a press conference in Berlin that the hardship accompanying the economic crisis in Greece had led to the third-biggest party in parliament being a bunch of unashamed Nazis – the extremist Golden Dawn party.

Why can't Greece be approached in the same conciliatory way as Germany in 1953, he asked. What happened in Germany in the early 1930s may also happen in present-day Greece, Varoufakis intimated.

Indeed; is it not true that sauce for the goose is sauce for the gander?

The problem is that Tsipras and Varoufakis were comparing apples to pears. Germany, whether in the early 1930s or the early 1950s, cannot be compared to the Greece of today.

Firstly, Germany – then as now – was one of the most powerful and influential countries in Europe. When Berlin coughed, Europe - so to speak - caught a cold.

On the other hand, Greece represents only 2.5% of the EU’s economy. And over the past few years European leaders worked hard to build walls around Greece to prevent a Greek cold from infecting the rest of the continent.

Free-wheeling Greece versus hard-working Germany

More importantly, in 1953 the Germans were busy effecting the 'economic miracle' which transformed a country full of smoking ruins into the leading European economic power. The reasons why they were able to do it is no secret: financial discipline, frugality, wise spending on the restoration of the infrastructure, excellent education, an efficient state administration which collected taxes from rich and poor alike, and a hard-working population.

What does Greece have to offer? A free-wheeling population where the rich (and many poor!) bribe tax collectors and successfully evade taxes, demand to retire at the age of 50 and are then conveniently kept by the state.

In fact, Greece is a corrupt shambles. Tsipras has vowed to tackle the problems and one supposes he must, for the time being, get the chance to prove he can do it. But he also wants to rehire the laid-off state officials, many of whom were on the books but never did a day’s work. He wants to throw around like water money the government doesn’t have.

And then he gets angry because the Germans do not want to subsidise his Marxist ideas?

The former head of the US central bank, Alan Greenspan, recently predicted to the BBC that Greece would have to leave the eurozone. He is probably right.

Tsipras and Varoufakis will have to learn that being good rabble-rousers in election time is not conducive to governing well. Of course, this is never easy. It is a lesson even our own ANC has not yet learnt properly.

* Leopold Scholtz is an independent political analyst who lives in Europe. Views expressed are his own.

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