Greek defi ance rattles the bankers

“Eleftheria I Thanatos,” “freedom or
death,” is the motto of Greece. It was a
slogan Greeks used during the War of Independence
from Ottoman rule in the
early 19th century, and after the country
gained independence in 1821, it became a
national motto. From the ancient Persian
War to World Wars I and II, Greece has
been a combat zone. As the originator of
Western civilization, Greeks fought off
countless challenges by external enemies.
The divided public over the Greek
bailout conditions ended with voices rejecting
the package. In the referendum
held on July 5, more than 60 percent voted
“no” to the proposal made to Greece by
the EU, the IMF and the ECB, requiring
additional retrenchment for a third bailout.
The gamble of 40-year-old Prime
Minister Alexis Tsipras’s “Grexit” threat
seems to have worked, for now.
What he needs to do next has become
clear. He can negotiate to have Greece’s
debts partially written off and accept less
strict austerity conditions. But the outcome
is not certain. In the eyes of creditors
in Europe and the United States, Tsipras
is a reckless leftist populist challenging
the financial order ruled by neo-liberalism.
They may not want to recognize him
as a counterpart and continue negotiations.
And even if they come to the negotiating
table, the outcome is not guaranteed.
It may end with a sovereign default
and a withdrawal from the eurozone.
In 2010 and 2012, Greece received astronomical
rescue financing that adds up
to more than 250 billion euros ($274 billion),
but most of the cash was used to pay
down earlier loans, and perhaps only 8
percent was used for economic recovery.
Cutting spending has limits. Austerity
policies have already reduced wages,
pensions and welfare benefits. Greece
cannot boost exports through currency
devaluation as Korea did during the IMF
bailout. It has given up monetary sovereignty.
Of course, Greece is primarily responsible
for the crisis. The fundamental cause
is administrative chaos as a result of
chronic corruption, excessive welfare and
wasteful spending of taxpayers’ money.
The Greek government deserves to be
punished for squandering borrowed
money. But the large banks that issued
loans that Greece cannot pay back and the
U.S. and European financial supervisory
authorities who have been negligent in
monitoring the banks are also accountable.
Nevertheless, most of the banks have
been saved from the crisis, just as we saw
in the subprime crisis. The major players
don’t sacrifice; the underprivileged and
the working class always suffer the most.
Today, the poor Greeks are hit hardest by
the crisis.
It is becoming clear that a common
currency in Europe was a rash idea. There
were warnings that a common currency
without financial and political integration
would be innately crippling. In today’s
eurozone, competitive economies like
Germany benefit from the common currency
while Greece is in crisis. Spain, Ireland
and Portugal are also in jeopardy.
The euro may have been a Trojan horse
planted in continental Europe by neoliberalism.
In the aftermath of the Greek bailout
crisis, Europeans are waking up from the
dream of a unified Europe. Many people
are skeptical about the idea of Europe’s
integration. Bureaucrats in Brussels still
advocate the legitimacy of the Maastricht
Treaty and the Lisbon Treaty and do not
acknowledge their mistakes. But at this
rate, Europe may be faced with a bigger
problem. Spain may be the next Greece;
the leftist populist political party Podemos
has become the second-largest party
there. In France, the National Front, a farright
anti-EU political party, is gaining
ground.
The European Union is at a crossroads.
Germany may think this is a chance to
shake the “Club Med” states in Southern
Europe from the eurozone, but that is a
dangerous idea; it could undermine the
structure of the EU altogether. Once the
European Union breaks up, the vision of
a unified Europe without wars would be
shattered. Such an extreme scenario must
be prevented. Greece should be given
room to breathe and to sever the vicious
cycle of paying back debt with more debt
by writing off certain loans, as the IMF
has recommended.
Once the flames are extinguished in
Greece, authorities need to calmly review
what went wrong. The problems of a
common currency and European version
of neoliberalism need to be corrected to
save Europe.
Time will tell whether Greece’s choice
was a brave decision to choose freedom
over death.

*The author is an editorial writer of the JoongAng Ilbo.

by Bae Myung-bok