Jacob Heilbrunn

The End of Socialist Greece

Europeans, exasperated by Greece's profligacy, have taken to calling the situation there "real existing socialism," the same phrase that the old communist bloc used to describe itself. Prime Minister George Papandreou is seen as a Hamlet who could not even successfully fall on his sword. Meanwhile, the Greeks, or at least a motley crew of anarchists and members of the bloated state sector, are protesting any change. Is there a silent majority in Greece that supports reforms? Or is this the true fin-de-siècle? The end of the twentieth century, in financial misery, much as the nineteenth century ended in warfare in 1914? Perhaps Greece will in fact expose the weakness of Europe or force the creation of a smaller Eurozone. The Guardian, for example, is calling for Greece to exit (the British are happy they never entered, though the weakness of the pound spells the threat of inflation as imports become more expensive and the British economy, in any case, appears to be going nowhere). That would spell the end of the dream of Maastricht, a supra-European state that could stand toe to toe with America, that would ensure that it is no longer an economic power and political dwarf. The political class has gone into overdrive to reach a solution. But European leaders keep squabbling over what it might or should be. Most European leaders are skeptical, of course, about Greece's ability to alter its ways, which is why they keep trying to tie any further subventions to actual tax hikes and cuts in the state sector. European finance ministers meeting in Luxembourg are trying to hammer out some kind of compromise on the vexed question of how much responsibility the banks that lent Greece all the lucre in the first place should now assume. Chancellor Angela Merkel and Wolfgang Schauble pushed for banks to step up, while the Deutsche Bank is resisting. There is something both impressive and infuriating about the stance of the banks. Merkel must be fuming over their impudence. But this crisis is also a manifestation of the ratings agencies, which are viewed with disquiet and anger, as culpable for the financial crisis in 2008. In truth the most powerful person in Germany may be Deutsche Bank head Josef Ackermann. Writing in the Los Angeles Times, Timothy Garton Ash worries that Europe as a political and economic project is cracking up. The generation influenced by World War II—Helmut Kohl, Jaques Chirac—is gone. Relations between France and Germany are cool. But it is always possible that this crisis will serve to forge a new Europe. It will either emerge stronger or be smashed on the anvil of the Greek crisis.