http://www.forbes.com/sites/timworstall/2015/07/13/thisisacoup-germanys-plan-for-greece-isnt-quite-that-bad-but-remember-don-pacifico/
#ThisIsACoup: Germany's Plan For Greece Isn't Quite That Bad But Remember Don Pacifico
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As far as anyone can tell this morning, and this includes the bleary eyed politicians themselves, there appears to be some form of deal over the Greek debt problem. As far as we know it’s not a good deal, not a good one at all. However, it’s also not quite a coup despite the harsh terms of it. Nor is it a denial of democracy, as some of the more hysterical are calling it: the Greeks aren’t being told what they must do with their own money or economy, they’re being told the very harsh terms upon which they gain access to other peoples’ money. And democracy does indeed mean that those other people get a say in how their money is spent. So, rather than a coup this is probably better compared to 19th century gunboat diplomacy, the best example perhaps being the Don Pacifico affair. A different cast of characters, different specific actions, but rather the same underlying economic reality.
Our first point to note should be that this really isn’t the way to run a continent. As theBBC says:
Eurozone leaders have been meeting in Brussels for more than 16 hours.
Politicians and bureaucrats talking to each other for 16 hours: it’s unlikely that sensible decisions are going to be taken under such circumstances. And this is also why we had one of the two major sticking points, that German insistence (and long running Greek refusal) on having the IMF involved in whatever plan was adopted. The point being that everyone’s wise to the fact that this is how the European Union is run. Whatever crisis there is ends up being solved during marathon overnight talks and almost always this involves some grubby political fudging of the real issue. Not greatly helped by the knowledge that at least some of those trying to stay up all night and negotiate are rather more fond of alcohol than perhaps they should be. It is precisely to avoid this happening that the IMF was first brought into the bailout and why the insistence that it remain part of the next one. So that there’s some external organisation, with its own reputation and money to think about, that can keep whatever economic reforms are necessary as part of the deal. This isn’t an economic necessity by any means: whatever amount of money the IMF might contribute could as easily be found by the EU itself. The EU does have its own currency and its own printing presses, however much the rules say they shouldn’t be used in this manner. The IMF’s presence is political, to ensure that the federasts can’t just sign a blank check to make sure that their beloved euro project doesn’t lose a member. As one could imagine Hollande gaily doing, just as an example.
The details of the deal as far as we know them right now are here, from Jeremy Bogaisky. The other sticking point, over and above that IMF question, was the German insistence that there should be an offshore fund, holding Greek assets to be privatised, which would act as a guarantee for the new funds to be advanced to Greece. At one point the insistence was that there should be €50 billion in it, others have suggested €7 billion. That the taxpayers of other nations might want some form of security before sending their money off to the Aegean again seems fair enough in one sense. and yet there’s very definitely historical overtones to this. Being British I think specifically of the case of Don Pacifico. A riot in Athens damaged his property and he tried to sue for compensation. As he got no joy he then tried in Britain, he being a British citizen by birth. Events carried on and it all ended up with the Royal Navy and others blockading the port of Piraeus for two months until the Greek government of the day (amusingly, led by a German who had been placed upon the throne, Otto) finally coughed up. In the older British history books this is held up as a marvelous example of what it means to be British, to be the global top dog. Some foreigners get a bit bolshie with one of ours and we send a few boats to bring them back into line. Nowadays this is thought of in a rather more pejorative sense, as being gunboat diplomacy and an unwelcome manifestation of colonialism. It’s also illegal under the Second Hague Convention these days (although if I’ve read the clause correctly, it is still possible if people have promised to pay but don’t).
So one can see the German point: we want some security for our money (as the Finns insisted on getting on the earlier bailout). And it’s also possible to see the Greek point, why should we offer up the jewels of our economy to be sold off to foreigners? This is not though a coup, whatever the hash tag is insisting. It’s a bad deal and one that should be rejected but it’s a condition for gaining access to other peoples’ money, not an insistence that Greece do something with its own.
Which brings us to the question of what is really happening in these negotiations? My colleague Frances Coppola is along the right lines I think. The general German view, certainly that of the finance ministry and the bankers (the Bundesbank has considerable influence in German politics) is that Greece should leave the euro. But no one wants to take the political blame for pushing them out. So, propose a deal that is at the very outer limit of possibility and hope that Greece rejects it.
Where I would go further is that I think that some to most of Syriza also want to be out of the euro. But the Greek population doesn’t. Thus Syriza has been sticking by its various red lines throughout the months of negotiations on the grounds that it can leave the euro without domestic political damage if it can show that they were pushed, rather than that they jumped.
This is only opinion, I should make that clear. And also that I am not unbiased here: I’ve both worked for and been a candidate for (for the EU Parliament) the United Kingdom Independence Party. We’re the people who think that Britain should leave the whole shooting match of the European Union. I’m an extremist even within that party: not only do I think the euro is a bad idea for Greece, I think it’s a bad idea for everyone. And my extremism extends to thinking that the very idea of the European Union itself is a bad idea: no one should be in it. It’s a blot, a stain, upon the governance of what is otherwise a pretty wonderful continent. So do not make the mistake of thinking that I’ll ever have kind words to say about the motives and motivations of the poltroons that infest Brussels. Having actually been inside the European Parliament and various of the Commission offices, it’s not just that I don’t want my country to be run by them I don’t think anyone has committed a sufficiently bad crime to have to suffer being ruled by them. Unbiased I am not.
Given all of that though the only logic that I can see which makes sense here is that both the German negotiators and the Greek really want Greece to be out of the euro. But neither wants to have to take the blame either for pushing or jumping. Thus each insists upon clauses in whatever deal offered which they know the other side will not accept. Or at least hope they won’t. Syriza insists upon, say, not touching pensions knowing that the IMF and or Germans will not accept that: thus they can say we were pushed. Germany as here demands security for loans, hoping the idea will be refused and thus they can say Greece jumped. The end aim being, on both sides, to get Greece out while still allowing the perpetrators to stand around with a “What, who, me?” face of injured innocence.
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