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EU Financial Tug of War and the Greek Catalyst - By Nikolas Katsimpras

Featured EU Financial Tug of War and the Greek Catalyst - By Nikolas Katsimpras

Conflict is fueled by the perceived divergence of interests. The late reaction of the European Union to the tragic economic developments in Greece could only mean two things, either there was a lack of perception or there was a convergence of interests.

The European leaders of the past 30 years have been either ignorant of the growing Greek bubble, apparently one of the many in the EU, or the developing scenarios have been compatible with their interests. Considering the fact that the EU has been one of the biggest financial ventures in the history of humanity, it seems extremely unlikely that its architects were ignorant of the forming European debt bubble landscape. It is equally unlikely that they were unable to grasp another crucial detail: that such an incompatible system, with a central bank but without a common financial policy, would be balancing between instability and unsustainability. Something seems to be rotten in the states south of Denmark. The modern Greek drama might not be as unexpected and destructive after all.

Greeks have been prisoners in the parent-state sponsored bubble for decades. The corruption-infected blister is the result of a long populistic policy. Greeks were consecutively engaged in a long devastating series of events, ranging from the Revolution (1821) to the Balkan Wars, World Wars, Civil War (1946-1949) and ultimately a military dictatorship (1967-1974). This continuous chain of conflicts might have made the Greek opportunistic, egocentric profile a necessity for survival in the past, however that profile has evolved into an outdated unsustainable byproduct of the present. The tumultuous modern history of the country came to a bifurcation point immediately after the fall of the dictatorship.

That is when the dominance of a mass manipulating leftist policy set the foundation for a constantly deteriorating state. At that very point, there was no one willing to realize the immense responsibility of a political system that was given the unique opportunity to take Greece, both as a state and as a society, to the next century. Instead, the political world of that era, (the majority of which remains in power even today), adapted a corruptive, egocentric, profit driven approach that milked the state and sculpted a rotten mentality, substituting meritocracy by nepotism. The Greek barely ever felt related, protected or interdependent with his modern state.

These behavioral traits were enabled and manipulated by both the local political world as well as foreign players. Greece has been regarded as a pawn in the long-standing geopolitical games of the West against Russia. These games dragged Greece from a blood draining civil war after WW II, into a military dictatorship and finally a financial collapse. Greeks bare the main responsibility for their current situation, however the foreign tensions were both the enabler and catalyst. The sole reason for the inclusion of Greece to the European Community after the withdrawal of the junta, was to shield it against the Russian influence. Russia has always been considered the global geopolitical "Heartland" and its retention away from the Mediterranean Sea has always been a western priority. Greeks, with all their flaws, have been just a fly between two colliding bulls.

At the same time, one of the biggest financial ventures of all times started to take shape. The EU started, as a loose community, in order to evolve to a progressively integrating union. Greece, in its unsustainable condition, was caught up in the middle of the politico-economical fermentation processes and has been used as the catalytic agent for the future EU vision. There are far too many unanswered critical questions about how Greece was accepted to the euro zone: How was the debt allowed to increase at such a high level upon continuous European lending? How could the European funds have been allowed to be spent by such a corrupted political mechanism without control? How could all of that combined with the cooked figures of Greece's economy grant its entrance to the euro zone?

How were the various international financial lobbies allowed to gamble with the Greek bonds, through borderline legal short selling practices, which resulted to their vertical devaluation? Why were all of the above allowed, since their ripple effect could shatter the EU as a whole? If Greece were not part of the EU system, these questions would not have mattered. However, it is difficult to accept that the financial architects of such an enormous investment were tricked into this situation. It seems impossible that they could have jeopardized their greatest investment by allowing any member state to enter the euro zone on faulty data or just failed to detect the outrageous financial practices. As a matter of fact, it seems that it was common knowledge and the sole reason was, once again, purely political.

The EU is widely accepted being based on an incomplete foundation. It is almost impossible for any financial union to be viable when it has a common bank without common financial policies, and such incompatible internal dynamics. In order for an institution like that to be able to remain viable, there must be a significant level of political integration as well. However, the deep-rooted national identities in the EU would have made such a radical attempt impossible from the beginning — If only that was directly communicated to the people. The majority of European nationals would have never accepted the treaty of Maastricht, had they been told about the possibility of political integration; the German would not have given up his Marc, the Italian his Lira or the Greek his Drachma. Starting with an incomplete financial union and using the growing national debts of the mutant unity to coercively move towards the political EU integration, seems to be the only rational explanation for the current situation, other than pure incompetence.

Therefore, the Greek financial blister seems to be the catalyst for the future political unity of the European Union, when the peripheral states transition part of their financial and political sovereignty to the center. At this point there is hardly any room for reaction for neither the impoverished pride deprived satellite nations nor the investing ones. Interdependence is already too high to step back. Both Merkel's and Schäuble's recent statements about the paramount necessity of a fiscal/political union seem to verify the aforementioned scenario.

Debtocracy. The new paradigm in global governance. In Greece's case, the national government has already barely any leverage and control over its own decisions. The European financial tug of war is the modern equivalent of the American civil war. A necessity for the desperately needed economo/political unity. However, no matter how inspiring the future European vision might be, the strategy towards it, unfortunately, bears neither fiscal nor social morality over the people. The domino effect has started from Greece.

Nikolas Katsimpras - Hellenic American Leadership Council | Columbia University | John Jay