{"id":55985,"date":"2015-03-30T12:00:39","date_gmt":"2015-03-30T11:00:39","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=55985"},"modified":"2015-05-05T21:25:54","modified_gmt":"2015-05-05T20:25:54","slug":"deescalating-europes-politics-of-resentment","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2015\/03\/deescalating-europes-politics-of-resentment\/","title":{"rendered":"Deescalating Europe\u2019s Politics of Resentment"},"content":{"rendered":"

\"Yanis<\/a>25 Mar 2015 – <\/em>A German television presenter recently broadcast an edited video of me, before I was Greece\u2019s finance minister, giving his country the middle-finger salute. The fallout has shown the potential impact of an alleged gesture, especially in troubled times. Indeed, the kerfuffle sparked by the broadcast would not have happened before the 2008 financial crisis, which exposed the flaws in Europe\u2019s monetary union and turned proud countries against one another.<\/p>\n

When, in early 2010, Greece\u2019s government could no longer service its debts to French, German, and Greek banks, I campaigned against its quest for an enormous new loan from Europe\u2019s taxpayers<\/a> to pay off those debts. I gave three reasons.<\/p>\n

First, the new loans did not represent a bailout for Greece so much as a cynical transfer of private losses from the banks\u2019 books onto the shoulders of Greece\u2019s most vulnerable citizens. How many of Europe\u2019s taxpayers, who have footed the bill for these loans, know that more than 90% of the \u20ac240 billion ($260 billion) that Greece borrowed went to financial institutions<\/a>, not to the Greek state or its people?<\/p>\n

Second, it was obvious that if Greece already could not repay its existing loans, the austerity conditions on which the \u201cbailouts\u201d were premised would crush Greek nominal incomes, making the national debt even less sustainable. When Greeks could no longer make payments on their mountainous debts, German and other European taxpayers would have to step in again. (Wealthy Greeks, of course, had already shifted their deposits to financial centers like Frankfurt and London.)<\/p>\n

Finally, misleading peoples and parliaments by presenting a bank bailout as an act of \u201csolidarity,\u201d while failing to help ordinary Greeks \u2013 indeed, setting them up to place an even heavier burden on Germans \u2013 was destined to undermine cohesion within the eurozone. Germans turned against Greeks; Greeks turned against Germans; and, as more countries have faced fiscal hardship, Europe has turned against itself.<\/p>\n

The fact is that Greece had no right to borrow from German \u2013 or any other European \u2013 taxpayers at a time when its public debt was unsustainable. Before Greece took any loans, it should have initiated debt restructuring and undergone a partial default on debt owed to its private-sector creditors. But this \u201cradical\u201d argument was largely ignored at the time.<\/p>\n

Similarly, European citizens should have demanded that their governments refuse even to consider transferring private losses to them. But they failed to do so, and the transfer was effected soon after.<\/p>\n

The result was the largest taxpayer-backed loan in history, provided on the condition that Greece pursue such strict austerity that its citizens have lost one-quarter of their incomes, making it impossible to repay private or public debts. The ensuing \u2013 and ongoing \u2013 humanitarian crisis has been tragic.<\/p>\n

Five years after the first bailout was issued, Greece remains in crisis. Animosity among Europeans is at an all-time high, with Greeks and Germans, in particular, having descended to the point of moral grandstanding, mutual finger-pointing, and open antagonism.<\/p>\n

This toxic blame game benefits only Europe\u2019s enemies. It has to stop. Only then can Greece \u2013 with the support of its European partners, who share an interest in its economic recovery \u2013 focus on implementing effective reforms and growth-enhancing policies. This is essential to placing Greece, finally, in a position to repay its debts and fulfill its obligations to its citizens.<\/p>\n

In practical terms, the February 20 Eurogroup agreement<\/a>, which provided a four-month extension for loan repayments, offers an important opportunity for progress. As Greece\u2019s leaders urged at an informal meeting in Brussels last week, it should be implemented immediately.<\/p>\n

In the longer term, European leaders must work together to redesign the monetary union so that it supports shared prosperity, rather than fueling mutual resentment. This is a daunting task. But, with a strong sense of purpose, a united approach, and perhaps a positive gesture or two, it can be accomplished.<\/p>\n

____________________________<\/p>\n

Yanis Varoufakis is Greece’s finance minister.<\/em><\/p>\n

This is an updated and extended version of a post at yanisvaroufakis.eu<\/a>.<\/em><\/p>\n

Go to Original \u2013 project-syndicate.org<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In 2010, Greece had no right to borrow from German \u2013 or any other European \u2013 taxpayers, because its public debt was unsustainable. Five years later, the consequences \u2013 open animosity toward and from Germany, a humanitarian crisis, and a mountain of unserviceable debt \u2013 could not be clearer.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[51],"tags":[],"class_list":["post-55985","post","type-post","status-publish","format-standard","hentry","category-europe"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/55985","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=55985"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/55985\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=55985"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=55985"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=55985"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}