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Greeks benefiting from Brexit rhetoric

Greeks benefiting from Brexit rhetoric

Hitler common denominator as Europe wallows in its past

by David Marsh in London

Mon 16 May 2016

Greece seems likely to be a big beneficiary of heated European rhetoric over the British referendum and the ousting of the Austrian chancellor in a dispute over the rise of far-right politicians. Attrition in the UK and Austria has greatly contributed to softening German policy on Greek debt over the past week.

In three of Europe’s prime theatres of psychological war – London, Vienna and Athens – the spectre of Adolf Hitler is playing a role in helping shape events. Far from escaping its past, Europe is wallowing in it.

Boris Johnson, the mercurial former mayor of London and campaigner for British departure, enlisted the services of Germany’s 1933-45 Nazi government leader in a weekend interview on how Europe had to resist centralising tendencies. Just to show geographical even-handedness, he mentioned Napoleon too.

The Hitler comparisons provoked a predictable storm from Remain leaders. But it was in a sense a historical, if slightly hysterical, riposte to Prime Minister David Cameron’s enumeration, a few days earlier, of the battles of Trafalgar, Blenheim, Waterloo and two world wars to back his view that Britain had to stay in Europe.

In Austria, the hapless Werner Faymann quit after seven years as chancellor, the biggest political casualty yet of Europe’s refugee crisis that has led to a surge of support for the country’s far-right Freedom party, the leaders of which are routinely compared to Hitler.

A perennial element in the Greek fight to win concessions from creditors, led by Germany, is the memory of the country’s wartime rule by the Nazis. Occupation images are never far from the surface in Athens street demonstrations against allegedly German-inspired austerity.

Signs that Germany and other creditors are moving towards long-awaited Greek debt relief surfaced at last Monday’s euro finance ministers’ meetings. Amid renewed worries that Britain may leave the European Union after the 23 June poll, along with Faymann’s political demise, Germany wants to avoid further European turmoil during an acutely sensitive phase for European politics.

Berlin fears a British departure would open it to an unholy combination of protectionism and demands for German largesse from other European countries, particularly France and Italy. So the Germans are moving to meet the International Monetary Fund’s request for a further stretching out of Greece’s debts to the European Stability Fund, along with a cut in already low interest rates.

Debt relief and an easing of draconian European demands for a Greek primary budget surplus (before debt service) of 3.5% of GDP are a key condition for the IMF’s participation in the latest €86bn Greek bail-out.

A deal to extend outstanding maturities by another five years and to limit interest rates to 2% up to 2050 seems likely when European finance ministers assemble again on 24 May. This would secure Greek repayments of around €3.7bn to the European Central Bank, the IMF and other creditors in July – and ensure that annual Greek debt service does not exceed 15% of GDP up to 2030, a key IMF condition. French President François Hollande has played a key background role in preparing the prospective agreement.

Wolfgang Schäuble, the German finance minister, appears to have concluded, sensibly, that compliance with Greek, French and IMF conditions is a lesser evil compared with further bad publicity about German intransigence.

Yet pushing the compromise through a fractious German parliament will spark further outbursts from the anti-euro, anti-immigration Alternative for Germany (AfD) party. History as well as economics will remain in the headlines – with Hitler a shadowy yet potent common denominator.

David Marsh is Managing Director of OMFIF. This is No.58 in the series – the 100th article will appear on 23 June.

OMFIF’s series on the UK EU referendum presents a wide variety of perspectives from Britain and around the world ahead of the 23 June poll. We are assuring a balance between many different points of view, in line with OMFIF’s overall neutral stance on the issue.

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