CRISIS ATHENS: Outside of finance, the past is nearly always a guide to the future

The Slog

by John Ward

Berlin needs to recognise why we’re all nervous now…and why the Greeks would like their money back

Whether Wolfgang Schäuble likes it or not, Germany’s increasingly heavy hand in the Cyprus bailout negotiations left its smaller EU neighbours feeling anxious. Breaking with normal EU Stepford Wife tradition, Luxembourg’s foreign minister this week said that Berlin is “striving for a hegemony which is wrong and un-European”.

Foreign Minister Jean Asselborn told Reuters that “Germany does not have the right to decide on the business model for other countries in the EU. It must not be the case that countries are quietly choked, while using financially technical issues as a cover”. Unsurprisingly, now that Luxembourg has bleeped onto Berlin’s radar as a suitable case for destruction, Asselborn is breaking ranks. But the Merkel government’s response to such opinion remains rigidly unchanged: it is all a plot to paint Germany black, the Chancellery says, by using “outdated historical cliches”.

The Spin from Berlin doesn’t bear any serious examination: worse still, it increasingly bears a disturbing resemblance to the feigned innocence and amoral lies put out by Goebbels’ propaganda ministry between 1933 and 1945. Berlin tells us it had nothing to do with the Cypriot decision to administer a depositor haircut, but this is clearly untrue: the German contingent led the charge for a 40% levy from the outset. The German Finance Ministry issued a statement saying the Nicosia delegation arrived with the idea and put it to the FinMins. This too is a ridiculous reversal of what actually happened.

But the more serious charge against Berlin – which has been driving the austerity ‘policy’ from Day One – is that, while its behaviour is indeed a historical cliché, it is by no means outdated. The Germans have, in their diplomacy over the last eighteen months, shown very disturbing signs that they are reverting to type: history may not repeat, but it does rhyme.

I posted a few weeks ago about the eerie similarity between the German approach over Cyprus, and its treatment of Czechoslovakia in 1938. A UK Treasury source told me in January, following Schäuble’s visit to London, that some Whitehall grandees were “astonished at the assumptive arrogance of the German Finance Minister’s approach”. During 2011, senior CDU MPs openly told Engish counterparts they would be “forced to join the euro in the end”, one declaring publicly “Europe is speaking German again today”. The triumphalism may be historical, but an ‘outdated’ thing is something people don’t do any more: the German political Establishment pulls this kind of tactless jeering out of the armoury with mind-boggling aplomb all the time now.

Please bear in mind before we go any further that I am referring here to die politische Klasse von Deutschland…not the average Hans. I would freely accept that many senior industrialists and Bankfurter right-wingers hold similar views to the German Establishment (my own source the Bankfurt Maulwurf freqently expressed them). But the German media work hard to hide the fact that many citizens there have grave doubts about government policy. My German friends from Sabine to Arnold via Peter, Alexandra and Angelika are the living evidence of that.

Over the last few days, I’ve been reporting from Athens about how – regardless of debts run up over the years by New Democracy and Pasok crooks with the willing help of Jean-Claude Trichet and Goldman Sachs – the SME sector in general here was supporting an entirely viable economy based on business-to-business trade and thriving tourism. Yet with regard to both Athens and Nicosia, Berlin has attempted to suggest that they were flawed economies only possible via fiscal lies and tax evasion. The facts simply don’t support that contention: they are post-rationalised excuses for vandalism, nothing more.

Germany has reaped the benefit of a cheap euro over the last six years since its own self-imposed austerity….an austerity imposed on German workers, mind you – not bosses. Not a single cent of non-budgeted German Finance has passed from Berlin to ClubMed since the Greek sovereign debt balloon was revealed in 2009. But they persistently whinge about “the rising cost” of being in the eurozone.

90% of what emerges from Berlin is obfuscation and deliberate deflection of blame: it is aggressive German econo-foreign policy conducted from beneath the thick Victorian skirts of the European Commission and its poodle, the FinMin Eurogroup. Djisselbloem is an idiot, but a useful puppet all the same: occasionally, he gives the game away…at which point Schäuble hastily cajoles the FinMins into releasing a statement saying Dieselgoon made a silly mistake. Even that underestimated the exact degree of the Dutchman’s idiocy: he blurted out that he wasn’t consulted about the statement. Of course he wasn’t: why would he be? He’s Dutch – and the Dutch are in trouble too. They are not in Ordnung.

The point is a simple one: whenever one interrogates the Berlin position, it always collapses…standing as it does on a tissue of lies, beneath which there is only thin air.

The Slog’s more dismissive comment threaders talk of “ridiculous anti-German rhetoric”, but they are the same folks whose grandparents were booking Bavarian skiing holidays in August 1939. They railed against the Slogpost about Czechoslovakia, and I am sure they will be incandescent after they read the evidence I now present below.

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After the Italian fiasco-war against Greece in 1940-41, the Wehrmacht abruptly took over the job of squashing the Hellenic Armed Forces. In the first year of the occupation, 40,000 Greeks starved to death. German soldiers executed a further 25,000 in their fight to stop ordinary citizens helping the Resistance. The Jewish population almost literally disappeared. In Kalvyrta in the Northern Peloponnese, the Wehrmacht shot every male in the town as a reprisal. By the time the occupiers left, a loaf of bread cost 2 million drachmas.

When in 1942 Mussolini’s son-in-law Count Ciano warned Hitler that German looting of Greek food and resources was only adding to the intense hatred of the occupying forces, Hitler simply ordered that the name of the practice be changed from German transfer costs to German reconstruction costs. Propaganda was hastily released showing Nazis, Greek mayors and orthodox priests discussing how best to rebuild. If that doesn’t echo the contemporary “we’re here to help you” bollocks, I’d like to know what does.

In August of that year, Reichsmarschal Hermann Göring told the German occupation officials in Greece, “I see people living in the occupied territories stuffed full of food while here in Germany we go hungry. This continual concern for aliens must come to an end once and for all”. If that doesn’t echo the contemporary “Look – the Italians and Greeks are actually wealthier than us” spin-drivel, I’d like to know what does.

As early as 25th May 1941, the Reich plenipotentiary for Greece Günther Altenburg (backed up firmly by equally honourable officers in the Abwehr) told Berlin that “the looting by individual German troops and Wehrmacht supply offices has all but eradicated any support that existed for our occupation”. He could not have been more correct: even the German tendency in Greek politics rapidly turned against the Nazis. In the first three weeks of the occupation, 25,000 oranges, 3,000 lemons and 100,000 cigarettes were confiscated and shipped back to the Third Reich.

The 1941 grain crop was already 30% below normal, but with typical efficiency the Germans set up a sophisticated system of roadblocks to intercept all grain transports headed for market. Everything went back to the Fatherland: the Greeks were left to starve. In the year going forward from October 1941, 49,188 citizens in the Athens conurbation died…compared to 14,566 from the equivalent previous period.

“What does this have to do with 2013?” the carping trolls ask. Well, let me tell you in three words: German war reparations.

The view of Wolfgang Schäuble when it comes to such reparations could best be summed up as bureaucratic indifference. “This question was settled years ago,” he told the media ten days ago, “it is simply a distraction”.

Before one gets into any kind of detail on this issue, it is important to lodge one simple rule if we are to establish a truly level paying field…and no, that isn’t a literal error. It is the compound interest plus inflation penalty ratcheted-up debt mountain that makes any possibility of Greek comtemporary debt repayment a ludicrous fairy tale. Applying that precise same rule to German war reparations leaves Berlin in something of a spot. And that’s before one overlays the financial bill with the ethnically criminal reparation.

Two years ago, German commentator and Professor of Economic History at the London School of Economics Albrecht Ritschl wrote of ‘the brevity of Germany’s collective memory…..after the first world war and again after the second world war, Germany was the world’s largest debtor, and in both cases owed its economic recovery to large-scale debt relief….after the second world war the Americans imposed the London debt agreement of 1953 on their allies, an exercise in debt forgiveness to Germany on the most generous terms. West Germany’s economic miracle, the stability of the deutschmark and the favourable state of its public finances were all owed to this massive haircut. But it put Germany’s creditors at a disadvantage, leaving it to them to cope with the financial aftermath of the German occupation.’

The London debt agreement deferred settlement of the reparations question to a conference to be held after a future German reunification..which most people thought would never happen. But ever since it did happen in 1990, the Germans have steadfastly refused to honour the settlement. Only one country has challenged this openly, and in a legally precise manner: Greece. Wolfie Strangelove emits wind from his anus about the matter having been settled, but this is yet more baseless assertion: it hasn’t been settled, and there is not one shred of either diplomatic or financial paper to support Schäuble’s ex cathedra insistence that it has.

In 1990, the Germans argued that any plausible deal would exceed the country’s resources, and that continued financial co-operation in Europe instead would be infinitely preferable. Waydergo: wouldn’t it be just peachy if the Germans now returned that favour in relation to Greek debt? Would a little smidgen of Berlin forgiveness and cooperation in relation to ClubMed be appropriate here? OK, I give in – you’re right: yes, I think it probably would.

Listen up troller people: you can chuck as many insults my way as you feel fit, but you cannot deny my consistency. I have been saying since late 2009 that debt relief aka forgiveness is the only viable solution to the global econo-fiscal mess. Various interest groups stand in the way of this happening: they include Chinese economic fascists, lending-incontinent American banks, global central bankers, hedge funds, almost all politicians, and in fact everyone who stands to lose from their own stupidly thoughtless export, lending and debt bond purchase policies.

But in the European theatre, by far the biggest enemy of real eurozone recovery – and a return to the original Treaty of Rome principles – is the CDU-led Coalition government of Angela Merkel. So brand me a Germanophobe if you must, but remember: the overwhelming weight of recent European history, cultural anthropology, and empirical observation supports me, not you.

The brand-spanking new Alternative for Germany Party (AfD) launched a week ago, and had this to say: ““The euro is dead. What we do right now is put it under special surgery, and give it infusions. Actually it is already dead, but our politicians haven’t recognized that yet”.

I couldn’t agree more. There is but one more question to ask: does the German Establishment want an EU partnership of cultures, or a eurozone in which German hegemony rules supreme and unbending?

It is a fair question. Let’s see if anyone in the CDU or Brussels is capable of a straight answer.