Tolstoy was wrong. Every unhappy family is not unhappy in its own way. Scratch the surface of a foundering relationship, and you’ll often find that money is, if not the sole source of the misery, undeniably the most poisonous. This is certainly true within the “ever closer” family that the European Union is meant to be. Some of the EU’s most savage fights have been about cash, an awkward fact that can equally be read as underlining just how far from familial this most unnatural of unions really is. The different nations of the EU remain, emotionally at least, nations. They continue to be foreign to each other. And who wants to give their money to a bunch of foreigners?
So it shouldn’t be any surprise that Germans are infuriated at the thought of having to stump up for a rescue of Greece’s Augean state. Their own economy is faltering. They have held back labor costs for years. They have, often painfully, maintained budgetary discipline. That’s not the way it’s been in Greece. With Greek government debt at 125 percent of GDP, a budget deficit of 12.7 percent, and distinctly shaky public support for any sort of austerity program, there is little, beyond beaches, about that country to appeal to citizens of the thrifty Bundesrepublik. Opinion polls show that over two-thirds of Germans reject the idea of contributing to a Greek bailout, and the venom with which that opposition is expressed suggests that exasperation has drifted into contempt.
To give more money to the Greeks would be akin to giving schnapps to an alcoholic, argued Frank Schaeffler, deputy finance spokesman for the Free Democrats, the junior partner in Germany’s governing coalition. Focus magazine ran a cover story on “The Fraudster in the Euro-Family” (a reference to the more creative aspects of the Greek government’s accounting) and illustrated it with the Venus de Milo, one-armed and flipping the bird. The tabloid Bild raged at the “proud, cheating, profligate” Greeks. A writer for the rather more heavyweight Frankfurter Allgemeine Zeitung asked whether Germans should have to retire at 69 rather than 67 to pay for Greek workers striking against proposals to increase their retirement age from 61 to 63. The mood in Germany was not improved by Greece’s deputy prime minister. Stung by all the criticism of his country, he grumbled that, having made off with Greece’s gold during the war, the Germans were in no position to complain “about stealing and not being very specific about economic dealings.”
Germany has long paid the largest share (currently around 20 percent) of the cost of Europe’s trudge towards union. Its annual payments into the EU now exceed what it gets back by over $10 billion. In part this has been viewed as a fair price for Germany’s readmission into polite society. It was also an expression of the once widespread belief—deluded if understandable—among Germany’s political class that an ersatz European patriotism could take the place of the German nationalism that had turned out so unfortunately just a few years before. Over six decades after Hitler perished in his bunker, however, these arguments are running a little thin.
Making matters worse is the debt (in all senses) that the Greek crisis owes to the establishment of the euro, the single currency for which German politicians ignored their voters and junked the deutsche mark in a two-stage process ending in January 2002. The deutsche mark had been one of the great successes of postwar Germany, a symbol of renewed prosperity and bulwark against any return of the hyperinflation that stalks that country’s historical memory. But, to those that counted—i.e., not German voters—the European Union mattered more. The deutsche mark perished, and the economic and budgetary rules—the Maastricht Criteria—designed to preserve the integrity of its successor (and reassure the twitchy German electorate) have not been kept in much better shape.
The new currency proved both an enabler of Greece’s profligacy and an agent of its economic troubles—a double whammy not confined to Greece. From the first, the euro’s interest rates were primarily determined by economic conditions in the eurozone’s core—Germany, the Benelux, and France—which meant that rates were too low for the nations on the periphery. One size did not fit all. The low interest rates fueled inflation, speculative bubbles, and, in some cases, excessive government borrowing in Portugal, Ireland, Greece, and Spain, the four “PIGS” in the financial markets’ insulting jargon. (You’re welcome to throw in another I for Italy.) The usual response to disruptions of this nature is devaluation. Signing up for a single currency, however, has removed that option.