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Analysis
How Greece resembles East Germany

How Greece resembles East Germany

Germany’s psychological attrition with weaker states 

by David Marsh

Tue 7 Apr 2015

Greece’s seemingly interminable wrangling with its creditors over resolving its unsustainable debt demonstrates many characteristics that are strongly reminiscent of the years of psychological attrition between East and West Germany before reunification in 1990.

Financial and political polarisation between Greece and Germany – the most vocal debtor in the euro area and the largest (and most vulnerable) creditor – displays significant similarities to the tensions between the two halves of the German nation split by the aftermath of the second world war. Some of these strains will be on show when Alexis Tsipras, the Greek prime minister, visits Moscow on Wednesday.

In divided Germany, the two German states formed in 1949 eventually came together again after 41 years of separation. This was a result of the fading of the post-1945 geopolitical force field – the superpower confrontation between the US and Soviet Union, each one shielding its respective client state West and East Germany – that had kept them apart.

Germany and Greece can be seen, too, as mirror images. In line with Europe’s fluctuating fortunes over the past seven decades, the former prospered and became a model nation and creditor. The latter declined and became a case study for mismanagement and a serial debtor. 

West Germans found it difficult to heap too much opprobrium on East Germany because they were uneasily aware that the Germans east of the Elbe were in economically dire straits partly because of arbitrary post-war developments. 

In the same way, despite Berlin’s exasperation with the Greek government, and the widespread feeling in German public opinion that Greece should not be in the euro, German government spokesmen find it near-impossible to criticise Greece directly, let alone to call for its expulsion from the currency bloc.

This reflects residual German feelings of shared responsibility for Greece’s parlous state, a consequence of the Nazis’ second world war crimes against the Greek population as well as Germany’s more recent role in forcing more debts upon a country that was already unable to repay its existing borrowings. Greece, like East Germany 25 years ago, owes the German government huge sums that all sides know can be recovered only if the debtor’s health improves.

Greece’s Syriza-led government has adroitly focused attention on these German points of vulnerability. Although Greek behaviour has irritated many in Europe, there are signs that Athens’ policy of widening responsibility for the country’s problems has started to bear fruit.

The forces on the two halves of Germany 25 years ago were ultimately centripetal, resulting from West Germany’s constitutional commitment to reunification and the overriding wish of most East Germans to accede to western prosperity and stability.

Greece and Germany, on the other hand, may be ultimately driven apart by centrifugal forces, as Germany and the rest of Europe reassess whether the continent will be more or less stable if Greece remains in the euro. But Greece will leave the euro bloc only if Europe believes that Greece’s ‘nuisance value’ in destabilising its neighbours and partners is greater inside the single currency than outside.

For many years, East Germany was regarded as the pivotal state in the Soviet bloc, the removal of which from Moscow’s influence would cause the collapse of the post-war European constellation and possibly the third world war. In a similar way, Greece has a hold over the rest of Europe that is considerably larger than its relatively small economic size would warrant. 

As chancellery minister and then interior minister in Chancellor Helmut Kohl’s government in the sensitive years leading to and during reunification 25 years ago, Wolfgang Schäuble, now Germany’s finance minister, took a highly cautious line on the prospect of East German destabilisation. He feared a superpower conflict that could cause both parts of Germany to go up in flames.

Schäuble’s analysis a quarter of a century ago shows some remarkable parallels to his judgment now that Greece – whatever its non-compliance with bail-out packages – would be a considerable source of geopolitical instability if it quit the euro. This reflects political and social volatility in an ‘arc of crisis’ that runs from Ukraine through southeast Europe and the Balkans into Turkey and the Middle East.

In the weeks before the fall of the Berlin Wall in November 1989, Schäuble like many in the Kohl government feared the Soviet Union would send tanks and troops into Berlin, which could have triggered a nuclear holocaust. Similarly, there is considerable anxiety today that overt hostility to Greece now could send Athens into the arms of a revisionist and resentful Russian government – fears that the Syriza administration has been quick to augment and exploit. Chancellor Angela Merkel, like her predecessor Kohl in his relations with the East German regime, has been conciliatory and even-handed in her dealings with the Syriza government. 

There is one fundamental difference between Greece and East Germany. West Germany cannot unite with Greece to resolve the latter’s difficulties. The absence of a direct answer to the imbroglio forestalls any direct clear-cut outcome to the debt crisis. Greece may limp on in monetary union in a half-in half-out limbo state, possibly with exchange controls to keep money in the country, for some considerable time. German unification in 1990 solved a lot of problems. To overcome the complexity of the relationship between Athens and Berlin there are no easy solutions.

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