By Luke Field, PhD researcher at UCD’s School of Politics and International Relations.
(with apologies to Joe Strummer)
The German word schuld has multiple meanings and translations, including ‘debt’, ‘guilt’, and ‘blame’. Whether this is a coincidence or a causal factor is not a matter for this blog, but it is certainly interesting, given that matters of debt in political economy are seen as moral issues as much as economic circumstances. This introduces a normative element to political economic problems. Indeed, The Economist recently suggested that cultural differences between Germany and Greece with regard to how debt is viewed may contribute to different perspectives on the Greek debt crisis and proposed resolutions.
It is noteworthy that negotiations (and disagreements) over measures to deal with Greece’s debt are often framed as a face-off between Germany and Greece. Despite the broader Eurozone context and the players involved at the institutional level, such as the European Central Bank and the International Monetary Fund, media representations often reduce the conflict to Germany––sometimes even Chancellor Merkel herself––versus Greece. Take as an example the (in)famous Economist front page ‘Acropolis Now’.
Should Germany take the blame for Greece’s debt crisis? Ana Swanson, writing for the Washington Post, certainly seems to think so. In her analysis, Germany––along with France as a partner-in-crime––generated the crisis’ origin, throwing cheap loans at Greece to boost its own investors’ interests in the region. Not only that, but Greece has been deprived of options for dealing with the crisis that could well be effective, such as currency devaluation and allowing inflation, due to its participation in a currency union that was effectively made in Germany’s (monetary policy) image.
This view of Germany as the ultimate culprit for the modern-day Greek tragedy is not a new phenomenon in the media analysis. Five years ago, The Economist was also blaming the German approach––and its inconsistency––for the spiralling crisis. Despite the significant social and political upheaval in Greece, little seems to have changed in the interim.
Beyond the issue of who is specifically to blame for causing the Greek crisis, Germany has also borne accusations of hypocrisy for its reluctance to engage in debt forgiveness––another normative judgement. As described by Albrecht Ritschl of the LSE, Germany had significant debts following each of the World Wars. Being crushed under the weight of unsustainable debt in the interwar period destabilised Germany, whereas the debt forgiveness that West Germany received in 1953 allowed for the country to rebuild and create future prosperity. Critics such as Ritschl and Eduardo Porter of the New York Times say that Germany’s refusal to engage in this sort of extensive debt relief for Greece is both hypocritical and a failure to adopt an empirically-proven successful solution.
Reminders of Germany’s dark period in the 20th Century have been frequently employed as a means of reinforcing the moralistic dimension to the dispute. When Alexis Tsipras’ first act as Greek Prime Minister was to lay roses at a memorial for Greek communists killed by Nazi occupiers in 1944, it was both a fairly blatant symbolic show of defiance against Germany and a reminder of Germany’s previous moral culpabilities for damage to Greece. It was unsurprising to many when a moralistic demand for World War II reparations to be paid from Germany to Greece was made by the Syriza government shortly thereafter.
Even within Germany, there are critics of how the state has conducted itself with regard to the Greek crisis. An article in Der Spiegel from March 2015 discussed the view within Europe that Germany was striving for continental dominance and seeking to gain a position of power over its neighbours, with its relationship with Greece described as a ‘chokehold’ and ‘comparable to that between a tyrant and his slaves’. The article concludes that, while the more extreme criticisms of Germany––particularly comparisons between the current government and the Nazi regime––are at best misguided, the country effectively ‘rules’ the Eurozone and displays an unhelpful attitude towards its European neighbours.
So, there’s clearly a strong moralistic dimension to this discourse, but does laying the blame at the feet of Germany hold up? There is certainly some evidence to suggest that Germany has done quite well out of the crisis and its aftermath. Germany’s own Halle Institute for Economic Research recently published a paper that suggested the German government saved up to €100m in lower borrowing costs between 2010 and 2015, i.e. during the period when Germany’s stance towards Greece became extremely tough. Taken alongside Swanson’s argument that Germany’s unsustainable lending to Greece was a reckless pursuit of profit from the region, one does begin to see a narrative emerge where Germany effectively views Greece as a source of profit for itself and little else. Extremely difficult to prove the validity of this narrative, of course, but it does reinforce the primacy of normative and moralistic judgements.
Not all of Germany’s critics take the view that its attitude towards Greece has a profit motive. In a scathing piece for Bloomberg View, Clive Crook accuses Germany––through the proxy of the European Central Bank, which he feels is politicised––of prescribing unnecessarily hard measures for Greece as a form of punishment. A different interpretation, but the same normative judgement and assignment of blame is visible.
Of course, not everyone holds the view that Germany is to blame for the Greek crisis, or has a moral imperative to engage in measures to mitigate against those problems. Writing for Bloomberg in January 2015, Leonid Bershidsky attacked the 1953 debt-relief comparison head-on, saying that both the circumstances and the attitudes of Germany in 1953 and Greece in 2015 are sufficiently different that the comparison does not bear up to scrutiny. Similarly, Andres Martinez of Zócalo Public Square has described the comparison as a lazy journalistic trope.
Different interpretations of Germany’s response to the Greek crisis can be found amongst those who do not assign blame to Germany. Ulrich Speck, a Carnegie Europe visiting scholar interviewed by the U.S. Council on Foreign Relations, says that Germany’s approach to Greece was based on making the Greek economy viable once more, and not a punitive measure. However, it is interesting to note that Speck also explicitly rejects the reductionist approach of casting negotiations as a clash between Germany and Greece.
Compare this to the view of Chris Giles, writing in the Financial Times, who does seem to endorse the Germany versus Greece framing. Giles––like Crook––views the measures inflicted on Greece by Germany as essentially punitive action, but while Crook is critical of Germany for doing this, Giles is supportive. In his view, Greece’s crisis is of its own making, and the punitive measures favoured by Germany are ‘deserved’ by Greece for the hardline attitudes adopted by the Syriza government in particular.
The examples above go to show that, in political economy as much as in the German language, ‘debt’ and ‘blame’ are heavily linked, at least in the context of the Greece crisis. There is a significant diversity of opinion on where the blame should lie; but whether it is being shirked, denied, or laid elsewhere, actors and commentators show an inability to discuss debt without discussing blame (and, therefore, making normative and moralistic judgements) as well.
This blog post was completed as part of the UCD School of Politics module, European Political Economy.
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