My apologies for the title of this post, but I may never get a better opportunity to deploy this particular pun. The tale of a man who foolishly squanders his wealth on false friends that subsequently desert him in his hour of need, causing him to become a wretched misanthrope, might appear to be promising raw material, but I'd be doing serious damage to try and eke out any real parallels with the Greek debt crisis. However, I cannot pass on without noting that Shakespeare's play was a favourite of Marx, partly for its cynical view of the corrupting power of money. As the German summarised it, "Money, then, appears as this distorting power both against the individual and against the bonds of society, etc., which claim to be entities in themselves. It transforms fidelity into infidelity, love into hate, hate into love, virtue into vice, vice into virtue, servant into master, master into servant, idiocy into intelligence, and intelligence into idiocy".
The impression I gained last week from the UK press and TV was that opinion in Greece was evenly-divided. It was clear on the ground when we arrived on Friday that the "No" (Oxi) camp was well ahead, and I really don't think this was due to a mysterious midweek swing. I think the British media slant was the product of a schismatic reading of Greek politics and the habitual pro/anti-EU frame, rather than conscious bias, though the regular interviews with small business owners bemoaning uncertainty and neoliberals bemoaning democracy on Newsnight is becoming almost parodic. Though there were a few riot police lurking off-stage during the "No" rally in Syndagma Square on Friday night, there was no sense of antagonism or threat, despite the simultaneous (and much smaller) "Yes" (Nai) rally at the nearby Panathenaic Stadium. "Oxi" dominated the posters and flyers around Central Athens, with the periptera (newspaper kiosks) providing little islands of "Nai" and anti-Syriza sentiment (one tabloid carried a magnified photo of Tsipras's face to suggest that stress was giving him cold sores).
Athens is always relatively depopulated in summer, as many locals head off for ancestral islands or rural villages, but this was even more pronounced due to the recent drop in tourist numbers caused by the scare stories of financial chaos. The longest queue we saw at an ATM was 5 people in the centre of town on the Monday morning. 0 to 2 was typical. It's worth remembering that living costs in Greece are relatively cheap, so a €60 a day limit is not quite the problem that London-based media types imagine. The cafés were probably about half as full as they would normally be, though those in both Exarchia (anticapitalist) and Kolonaki (rich) remained busy. The Greeks are having a hard time, but they are not on their knees (yet), hence the defiant "Oxi!". The historic significance of Sunday was the precedent of a national referendum being used to reject an EU-level agreement. Though this has happened before, notably during the Maastricht Treaty ratification process, it has usually been glossed-over as a "pause" or evidence of the need for "variable speed". There is no credible way to spin the Greek vote as anything other than a slap in the face.
The good humour of the Greeks (particularly evident as crowds gathered in Syntagma Square on Sunday night as the vote came in) should remind us that this "crisis" does not originate in Greek politics, despite the many historic failings of the Greek system, but reflects a wider struggle over the costs of neoliberalism, which is now corroding the EU. Greece is only atypical in quantitative terms, not qualitative. Steve Randy Waldman gets to the nub of the matter: "The choice Europe's leaders faced was to preserve the union or preserve the wealth, prestige, and status of the community of people who were their acquaintances and friends and selves but who are entirely unrepresentative of the European public. They chose themselves. The formal institutions of the EU endure, but European community is now failing fast ... They turned a systemic problem of financial architecture into a dispute between European nations. They brought back the very ghosts their predecessors spent half a century trying to dispel".
The architectural problems of the euro hardly need reiterating, but it is worth emphasising one key point: the implication of "convergence" was that the transition to a common currency could be achieved without the need to write-off historic debts. In other words, there would be no "reset", either in 1999 or thereafter. Despite last week's report by the IMF confirming that Greece's debt is unsustainable, this means that the group of 18 remain determined not to concede the Greek demand for a deal that includes a debt haircut. Despite the clearly exceptional situation of Greece, this would establish a precedent that the eurozone hardcore fear would quickly lead to either the disbanding of the common currency (to prevent the more incontinent members from "looting the treasury") or the acceleration of fiscal union (which might jeopardise the EU itself, even if some are attracted to the idea of shrinking back to "fortress hardcore").
In other words, the real cause of the EU's irritation with Greece is not Tsipras's "unreliability" or Varoufakis's "impudence" but the obligation to make a hard choice. Waldman is right to see the EU elite's response as a straightforward reflection of class interests, but I also think the current dilemma is coloured by the evolution of those interests since the fall of the Berlin Wall. Germany's tragedy was that social democracy quit the stage just before the moment it was most needed, namely at reunification. What Waldman calls the "loan shark theater" of the Greek crisis is in part the projection of a particular German angst over regional transfers, with the North-South EU divide inverted within the Federal Republic. To the Bavarian middle-class, the youth of Exarchia are indistinguishable from the "recipients" of Kreuzberg in Berlin.
This is the bitter legacy of the "Europe of the regions" meme that enjoyed such a vogue in the 90s and 00s, often as a rather hopeful counterweight to the "democratic deficit" of the EU. Though this was usually presented in progressive terms as a matter of devolution and autonomy, the reality was mainly wealthier regions, such as Catalonia and Lombardy, being reluctant to subsidise poorer ones. In those poorer regions (and outside those with a history of separatism, such as the Basque Country) devolution only gained traction once central government indicated a willingness to curtail transfers as part of a wider anti-redistribution policy, hence the birth of the meme in the 80s. For example, the advance of the SNP in Scotland can be sourced to the Poll Tax and regressive reform of local government financing under Thatcher (the current Tory offer of fiscal autonomy is a strategic continuation of that anti-distribution policy).
But the idea of regional identity is misleading. The strongest advocates weren't traditional "ethnonationalists" or reactionary antimodernists but business owners with minimal financial interests in the central state and growing interests (and peers) outside the country. John Hall, the erstwhile owner of Newcastle United, banging on about "the Geordie nation" and how the club could be the equivalent of Barcelona, was an emblematic if ridiculous UK example. Regional pride, like civic nationalism, simply reflected the evolution of capitalist interests. In particular, it highlighted the growing alliance of multinationals, who found Brussels and regional governments easier to negotiate with than national governments, and SMEs, who resented national taxes as their profit margins were eroded by increased global competition. In contrast, national businesses lost influence through market deregulation, foreign takeovers and privatisation, and were gradually replaced as a political lobby by companies dependent on public subsidies via tax-breaks and outsourcing. We swapped ICI and British Rail for Amazon and G4S.
2008 restored the clout of the national state through its bailout of banks and regional governments, but the consequent increase in central government debt has merely exacerbated the resentments of the richer regions, i.e. the resentment of businesses and asset-owners towards the nation state as an agent of redistribution, hence the new political orthodoxy of austerity, corporate indulgence, and the valorisation of inheritance. The hype of the "Northern Powerhouse" is typical of a vocabulary of devolution and autonomy that masks a reality of public service cuts and corporate handouts. The real division remains one of class, even if this is increasingly characterised spatially - i.e. by where you live - due to the dominance of property wealth: "the rich quarters of Europe are all more similar to each other than to the poorer areas that are nearer to them". And vice versa. Just as Kolonaki Square looks like Sloane Square, so Exarchia looks like Kreuzberg.
The Greek crisis has provided an outlet for this new class solidarity, which is why liberals and social democrats have been just as contemptuous of Syriza as conservatives have. A cynic might assume that Sigmar Gabriel, the German SPD leader and vice-chancellor in the current coalition, was merely reinforcing his own position in case Merkel compromises, but his angry dismissal of Alexis Tsipras is of a piece with his neoliberal track record. More ridiculously, Guy Verhofstadt challenged Tsipras in the European Parliament today to live up to the example of two earlier liberal Greek PMs, Charilaos Trikoupis and Eleftherios Venizelos. The former is famous for declaring Greece bankrupt in 1893, as a result of the clientelism that Verhofstadt claims Tsipras is reluctant to eradicate, while the latter ordered the seizure of Smyrna in 1919, triggering the Greco-Turkish War that would result in the destruction of the Greek communities in Anatolia.
The invocation of Trikoupis returns us neatly to Steve Randy Waldman's excoriation of the EU elite's foolish and historically ignorant attitude, and in particular their invocation of moral hazard as a reason not to write-off Greek debt. As he notes, "the term moral hazard traditionally applies to creditors. It describes the hazard to the real economy that might result if investors fail to discriminate between valuable and not-so-valuable projects when they allocate society's scarce resources as proxied by money claims. Lending to a corrupt, clientelist Greek state that squanders resources on activities unlikely to yield growth from which the debt could be serviced? That is precisely, exactly, what the term 'moral hazard' exists to discourage". Of course, the systemic risks built up by the global banking system (aka "too big to fail"), and the compromised interests of the neoliberal elite, trumped all consideration of moral hazard in 2008, which in turn required the rapid identification of an alternative scapegoat to carry this moral burden.
Showing that there is nothing new under the sun, Patrick Eichenberger (in 2010) described the international response to Trikoupis's announcement of bankruptcy in 1893: "German and other creditors tried to put pressure on their respective foreign offices, which argued that the investors knew about the risks involved. Therefore, the German state or other states could not act as a de facto saviour since creditors then probably would act even more foolishly in the future". Following a debilitating war with the Ottoman Empire in 1897, "Athens grudgingly accepted that a European commission would restructure the national finance status under account of the remaining interests of the creditors. As a result, many Greeks saw no future in their country and migrated to Europe, the United States, and also to Australia". What neoliberals like Gabriel and Verhofstadt cannot allow, dedicated as they are to their own perverse reading, is that Tsipras is trying to set Greece on a new path and that the EU is now playing a reactionary role, not a progressive one, by inhibiting him.