Greece’s reparations demand could bring the euro crisis to a head

9/4/2015

By Gideon Rachman

This week Greece finally put a figure on its demand for war reparations from Germany – €278.7bn as compensation for the death and destruction visited by the Nazis during the war. Opinion polls suggest that this gambit is widely popular in Greece. But by bringing this issue up now, the Greek government may have made a serious miscalculation that could contribute to the country’s disorderly exit from the euro.

Greece’s reparations demand comes at a time when the government in Athens is running out of money and its creditors are running out of patience. The country is likely to need a new bailout package this summer. By putting the reparations issue on the table, the Greeks may feel they gain extra leverage – as well as the possibility that they will actually get debts written off, rather than simply extended. But they have also significantly raised the risk that the Germans will simply walk away from the table altogether – forcing Greece into a default and a disorderly exit from the euro.

Even before the reparations issue was brought up, German exasperation with Greece was rising. In Berlin (where I’m writing from), the Syriza government led by Alexis Tsipras is felt to be chaotic, unreliable, divided and unserious. Raising the issue of reparations at this juncture merely confirms that impression.

Of course, Germany is a big country so there is a range of opinion on the possible payment of reparations to Greece. The official government position is that this issue was dealt with by a payment in 1960 and by diplomatic agreements surrounding the reunification of Germany after the fall of the Berlin Wall. On the left, there are some who argue that Germany should re-visit the issue and should indeed consider a substantial reparations payment. On the right, there are those who dismiss the whole Greek demand out of hand. One government official I discussed the issue with suggested – speaking personally – that Germany might be prepared to pay some extra reparations. But the issue would have to be based on a careful and systematic assessment and the money would have to go to a foundation to help specific victims or places that suffered – not straight into the Greek budget.

Behind such attitudes lies a deeper frustration and cynicism about the Greek demand. It has not escaped the Germans’ attention that Greece did not bring this issue up, when it was negotiating to join the European Economic Community (as it then was) in the early 1980s or when it was struggling to gain admission to the euro in the 1990s. Nor was this much of an issue during the two decades in which Greece, along with other poor EU nations, received billions of euros in grants from the rest of the EU, known as structural and cohesion funds.

It is also striking that the figure that the Greeks have come up with – €278bn – is roughly equivalent to the €240bn they have been lent in EU bailouts (with a little change left over). The Greeks also do not show much interest in seeking further reparations from Italy, which also occupied part of Greece in the second world war – albeit in a less brutal fashion than the Nazis.

The reparations issue could well fester over the coming months. Some in Berlin note that the Greeks have sought access to the Russian war-time archives. There is a concern that at next month’s celebrations in Moscow of the 70th anniversary of the end of the war, the Greeks may put up a special pavilion on German war-time atrocities.

All of this may provide some emotional satisfaction to Greece, a country that did indeed suffer terribly during the war – and that is now under enormous economic strain. But it is not an intelligent negotiating strategy. Any further package of loans to Greece will have to go through the German Bundestag. German politicians would have been highly reluctant to vote the money through under ordinary circumstances. Mixing up the debt issue with German war-guilt, and raising the possibility that it might never be re-paid – because it could be written off as “reparations” – sounds like a potential death-knell for the prospects of Berlin approving a new package of loans to Greece. And yet, without new loans, Greece could easily run out of money in the coming months.

Sigmar Gabriel, Germanys’ deputy prime minister, was speaking no more than the truth when he called the Greek reparations demand, “stupid”

Πηγή

Σχετική δημοσίευση εδώ.