How Greece alienated everybody in Europe

[Thanas]

Guardian

Varoufakis has achieved one thing – uniting resentment from poorer nations

Countries such as Latvia and member states in eastern Europe have been some of Greece’s most trenchant critics, after having to take part in the world’s biggest ever bailout


Yanis Varoufakis could not resist bragging. Shortly after Greece’s new leftist government struck a deal with creditors to extend the country’s bailout to the end of next month, the finance minister and glamour boy for the Syriza radicals waxed triumphalist about how he had outfoxed the eurozone.

“We no longer have this unified group against Greece,” he declared in a lengthy radio interview. “We now have a side that has broken down into many different sides, some of which are very open to our proposals. This by itself is a great success.”

So far, the extension of the bailout from 20 February to the end of June has remained the only breakthrough achieved by the brinkmanship of Alexis Tsipras’ government in talks with eurozone creditors.

The condition was that Tsipras comes up with a reform programme that could satisfy lenders. With the clock ticking and the odds shortening on a Greek default, they are still waiting for the Tsipras programme.

Varoufakis’ boast might have gone down well at home, but it was 180° wrong.

Rather than splitting the eurozone, he has managed to unite the other 18 single-currency countries against himself and against Greece more firmly than ever before. As an object lesson in how to make enemies and lose friends, it was quite a feat.

“He annoyed a lot of people, burned a lot of trust,” said one senior EU diplomat.

Two months on and following last week’s disastrous meeting of eurogroup finance ministers in Riga, Varoufakis was defenestrated. Ministers and officials were shockingly open in venting their exasperation and their contempt for the Greek finance minister, who stayed away from the group dinner.

Tsipras quickly read the runes, reshuffled his negotiating team, and shunted Varoufakis aside.

Only months ago, it seemed everyone loved Varoufakis. By last weekend he was tweeting how everyone hated him, and bitterly complaining about his “political deconstruction”.

It is fitting that the site of Varoufakis’ grief was Latvia, given that one of the undercurrents in the five-year Greek drama has been how the smaller and poorer countries of the eurozone, notably Latvia and the other two Baltic states, have bitten their lips while nursing intense resentment about having to take part in the world’s biggest ever bailout.

Lithuania’s finance minister, Rimantas Sadzius, was among the harshest of Varoufakis’ critics in Riga, participants in the meeting said. The Slovak and Slovene ministers were not far behind. Latvia chaired the meeting and had to be on best behaviour, but it has already been one of the most trenchant critics of Greece for years. Its views are shared next door in Estonia, too.

The chorus of criticism from the eastern periphery of the eurozone meant that the usual suspects – Wolfgang Schäuble of Germany and eurogroup chairman Jeroen Dijsselbloem of the Netherlands – were spared the need to issue their usual dire warnings to the Greeks.

“The EU is not just Germany and Greece,” said a former long-serving prime minister of an eastern European member state. “The [Tsipras] government didn’t have any understanding of how the EU functions. There are other countries, too.”

In a European Union of 28 member states, there are 12 countries poorer than Greece, according to World Bank per capita gross national income (GNI) figures for 2013. In the single currency bloc embracing 19 countries, six of them remain poorer than Greece even after the wrenching austerity and the collapse in living standards during the bailout years.

Tsipras had started out with elements of wary support in Italy and France and in the European commission, especially from France’s commissioner Pierre Moscovici and the EC chief, Jean-Claude Juncker. That has dissipated.

Two euro countries poorer than Greece – Portugal, which has been through its own bailout, and Malta – might have been expected to be sympathetic, but were also alienated. Malta described the Riga meeting as a “complete communications breakdown.”

But it is in the post-communist east that Greece’s problems are viewed most unforgivingly, regarded as an exercise in national narcissism.

Four of the six poorer eurozone countries are newer member states from the east, all of which went through the extremely painful economic reconstruction of the 1990s following the collapse of the Soviet Union. Additionally in 2008-9 the three Baltic states suffered their own financial meltdowns driven by the credit booms and reckless lending of the Scandinavian banks that dominate the region. Latvian GDP shrunk by 16%. State spending and social services were slashed. Up to a tenth of the population emigrated.

Prime Minister Valdis Dombrovskis led Latvia out of the mess and into the euro, all the time complaining that Greece was getting it wrong. He is now vice-president of the European commission in charge of the euro.

These countries have come out the other side – Lithuania joined the euro this year, Latvia the year before. Understandably they have little sympathy for the Greeks, especially since five years later the crisis remains unresolved.

“We’ve discussed it so many times and no one says Greece has to leave,” said the ex-prime minister, who attended countless EU summit deliberations on the Greek crisis. “But people feel humiliated and in many countries people don’t care about Greece any more. It’s hard for me if I’m prime minister to explain why we poor should help the rich Greeks. The Greeks can do their reforms if they want to, but not with our money.”

Vykintas Pugaciauskas, who helped run Lithuania’s EU presidency in 2013 before returning to Vilnius to work in national television, said he had been surprised that when the crash hit his country in 2008 there were no strikes or public unrest.

The reason, he said, is that Lithuania and the other Baltic states were willing to take the hit and “to suffer for a bigger cause”.

That meant joining the euro and entrenching themselves deeper in the EU. “Now we’re in the euro and we need to pay up for countries like Greece,” he said.

“There is a general resentment here all the time about this. This has got nothing to do with Tsipras or Syriza. It’s not a political party thing. It’s just that people say we shouldn’t be soft on Greece.”

As was expected when Greece started the stupid "Us vs Germany, good vs evil" spiel.

[Tribble]

Actually, this started the moment Greece was allowed to join the Euro currency. They should have never been allowed to join the Euro, and they shouldn't have been given bailouts as everyone with a working brain knew they couldn't (or wouldn't) keep to the terms. The Greeks want to have their cake and eat it too. They want to remain in the euro without having to abide by the bail out terms. They are never going to hold to any new agreement for long and everyone knows this, so why was the Eurozone so insistent on keeping Greece in the euro? They should have been kicked out a long time ago. Should Syriza fail to accomplish anything meaningful (from the Greek perspective), after the next elections the Eurozone can probably look forward to having to conduct the negotiations with parties like Golden Dawn. As I've said before a Greek exit is more or less inevitable, but I'd prefer to see it happen before more extreme parties than Syriza take control.

[Purple]

If had to make a guess I'd say that Europe figures Greece can't leave the eurozone without incurring an even worse fate than that which they have in store for it and that thus Greece won't leave. From that perspective all that's left to do is wait out until Syriza fails, Golden Dawn rises and than fails and the cycle runs how ever many times beyond that it takes for the Greek people to surrender to their fate and bend over.

[FTeik]

The Greece contribution to the unification of Europe. Considering how many sympathies Syriza had before and shortly after their won election - if the newspapers from that time are to be believed - it takes talent to piss away so much good-will.

[LaCroix]

...why was the Eurozone so insistent on keeping Greece in the euro? They should have been kicked out a long time ago.

For the x millionth time. I'm going to break format, this time, so maybe, finally, people will read and understand it.

THERE IS NO LEGAL WAY TO KICK SOMEBODY OUT OF THE EUROZONE. (JUST AS THERE IS NO LEGAL WAY TO UNILITERALLY SECEDE FROM THE USA, JUST THE OTHER WAY 'ROUND.)
THE ONLY ONES WHO CAN LEGALLY DECIDE TO REMOVE GREECE FROM THE EURO ARE THE GREEKS, WHO DON'T WANT TO.

[Starglider]

THERE IS NO LEGAL WAY TO KICK SOMEBODY OUT OF THE EUROZONE.

Although that is strictly true, the other EU countries could make it effectively impossible for Greece to remain in the eurozone, e.g. by revoking TARGET2 access. I am sure that would result in endless complicated legal proceedings, but if Germany and France agreed to do it they could. The ECB actually stated this outright back in 2009, noting that this would almost certainly (baring some last-minute treaty renegotiation) force a departure from the EU as well as the EMU.

Of course it's unlikely in practice due to the major negative impact on financial markets and reduction in confidence in the euro and the EU in general.

[Crown]

As was expected when Greece started the stupid "Us vs Germany, good vs evil" spiel.

People who can't admit they were wrong and can't justify their own horrid actions to their own people getting offended at being told they were wrong, shocker.

[Thanas]

As was expected when Greece started the stupid "Us vs Germany, good vs evil" spiel.

People who can't admit they were wrong and can't justify their own horrid actions to their own people getting offended at being told they were wrong, shocker.

Indeed, that exactly is Syriza's problem right now, having maneuvered themselves into a corner that scuttled whatever goodwill they had.