Cookie consent

We use cookies to improve your experience on this website. By continuing to browse our site you agree to our use of cookies. Tell me more | Cookie preferences

Why it's too late to save Greece's sovereignty

Yanis Varoufakis says Greeks are horrified at the prospect of losing national sovereignty.

Story highlights

  • German and Greek politicians are at odds over who should control Greece's budget
  • Greek political economist Yanis Varoufakis says both are guilty of failing to grasp the real problem
  • Varoufakis says both countries mislead voters in agreeing an unsustainable rescue package for Greece

German leaders are furious with Greece. Yet again they have to go back to their electorates asking for more billions to throw down the black hole that is the Hellenic Republic. They have now become so angry that they are even openly proposing that Greece's fiscal affairs be deferred to some European Commissioner, preferably one of a Teutonic disposition.

Greek leaders, meanwhile, have seized upon this German "transgression" with glee. For it offers them a wonderful excuse to put on domestic display their patriotic fervor at a time when they are running low on legitimacy in the eyes of a battered, demoralized electorate.

Beating their chests about the German threat to Greece's national sovereignty, they are hoping that the Greeks will somehow forget that it was they, their leaders, who ceded sovereignty to the so-called troika of the European Commission, the International Monetary Fund and the European Central Bank.

This is a typical case of a shady coalition of vested interests that is disintegrating under the weight of its collective hubris. For the past 18 months, German and Greek leaders have been working together to deny the truth about three simultaneous bankruptcies: The irreversible bankruptcy of the Greek state, the effective insolvency of many Franco-German banks, and, last but not least, the unsustainability of the euro-system as we know it.

Yanis Varoufakis

To keep these truths from surfacing, German and Greek politicians, each for their own purposes, settled on gigantic loans for Greece that would act as plaster on the festering wounds of the aforementioned bankruptcies.

But to get these "historic" loans through the parliaments of Berlin and Athens, they had to be portrayed as a form of humanism; as German solidarity to the Greek people. Alas, to extend such "solidarity," German lawmakers demanded subsidiarity; which is euro-speak for the recipient agreeing to a tough reform agenda, complete with strict fiscal targets. In plain language, the huge loans would only be granted if similarly lofty promises were made by the Greek government.

    Thus, German leaders, unwilling to confront their bankers and the fault lines developing throughout the eurozone, pretended to believe that the problem was Greece and that Greece could be "cured" by means of loans and austerity. At the same time, Greek leaders, unwilling to confront their electorate, pretended to believe that they could deliver the targets demanded by Germany.

    Of course, it was only a matter of time before reality caught up with both sets of leaders. Once it became abundantly clear that the targets Greece had committed to were well and truly unrealistic, the coalition between our German and Greek leaders became testy. The knives are out and, if it were not for an equilibrium of terror at the thought of a euro-system collapse, a disorderly brawl would be plain for all to see.

    The worst part of this sad saga is that public debate is still failing to keep track with the real issues. Instead of coming to terms with the structural imbalances within the eurozone, the Germans accuse the Greeks of incompetence, corruption and a singular failure to meet "their" targets.

    The Greeks, meanwhile, are replying with references to World War II and yelps of horror at the prospect of violations of national sovereignty. Neither side is willing to admit that the whole rescue package was flawed from the outset. No serious consideration is given to the plain facts:

    •That the cascade of insolvencies in the eurozone should never have been treated like liquidity problems fixable by loans to the bankrupt banks and states.

    •That it is always a terrible idea to make large loans to an already shrinking economy conditional on further reduction in the national income from which these loans must be repaid (for this is precisely what hefty austerity measures in the middle of a recession achieve).

    •That Greece's agreed targets would be equivalent to my promising, perhaps under duress, to break the world 100-meter sprint record in the forthcoming London Olympics.

    The punishment of any big lie is its revelation. Unfortunately, we are not there yet.

    The preordained failure of the Greek "program" has not yet exposed our leaders' connivance. It is, instead, generating Teutonic wrath among the hard working Germans (whose living standards have been under constant pressure for a decade, and who are now told they must guarantee even more zillions for the Greek state) and unbearable Sisyphean pain for Greeks caught up in a vicious cycle (from which no amount of hard work or innovative thinking can help them escape).

    Something must give. If it is not our leaders' insidious lie, it will be the eurozone. It's that simple.

      Markets in crisis

    • German Chancellor Angela Merkel talks with Finance Minister Wolfgang Schaeuble during a session at the Bundestag (lower house of parliament) on June 25, 2013 in Berlin.

      German Finance Minister Wolfgang Schaeuble says the eurozone's problems are not solved, but "we are in a much better shape than we used to be some years ago."
    • IBIZA, SPAIN - AUGUST 21:  A man dives into the sea in Cala Salada beach on August 21, 2013 in Ibiza, Spain. The small island of Ibiza lies within the Balearics islands, off the coast of Spain. For many years Ibiza has had a reputation as a party destination. Each year thousands of young people gather to enjoy not only the hot weather and the beaches but also the array of clubs with international DJ's playing to vast audiences. Ibiza has also gained a reputation for drugs and concerns are now growing that the taking and trafficking of drugs is spiralling out of control.  (Photo by David Ramos/Getty Images)

      Summer could not have come soon enough for Lloret de Mar, a tourist resort north of Barcelona. Despite the country's troubles, it's partying.
    • The Euro logo is seen in front of the European Central bank ECB prior to the press conference following the meeting of the Governing Council in Frankfurt/Main, Germany, on April 4, 2013.

      The global recovery has two speeds: That of the stimulus-fed U.S. and that of the austerity-starved eurozone, according to a new report.
    • The flags of the countries which make up the European Union, outside the European Parliament in Strasbourg, France.

      The "rich man's club" of Europe faces economic decay as it struggles to absorb Europe's "poor people", according to economic experts.
    • Packed beaches and Brit pubs? Not necessarily. Here's what drew travelers to one of Spain's most beautiful regions in the first place

      Spain's economic crisis is in its sixth straight year yet tourism, worth 11% of GDP, is holding its own, one of the few bright spots on a bleak horizon.
    • Photographer TTeixeira captured these images from a May Day protest in Porto, Portugal, Wednesday by demonstrators angered by economic austerity measures. "People protested with great order, but showed discontent against the government who they blame for this economic crisis," she said. "They want the government to resign and the Troika [European Commission, International Monetary Fund and European Central Bank] out of this country."

      As European financial markets close for the spring celebration of May Day, protesters across Europe and beyond have taken to the streets to demonstrate.
    • Croatian Prime Minister Zoran Milanovic delivers a speech in Mostar, on April 9, 2013. Prime Ministers from Bosnia's neighboring countries arrived in Bosnia with their delegations to attend the opening ceremony of "Mostar 2013 Trade Fair".

      As Croatia prepares to enter the 27-nation European Union, the country's Prime Minister says Italy must return to being the "powerhouse of Europe."
    • Anti-eviction activists and members of the Platform for Mortgage Victims (PAH) take part in a protest against the government's eviction laws in front of the Popular Party (PP) headquarters in Mallorca on April 23, 2013.

      Spain's unemployment rate rose to a record high of 27.2% in the first quarter of 2013, the Spanish National Institute of Statistics said Thursday.
    • People protest against the Spanish laws on house evictions outside the Spanish parliament on February 12, 2013 in Madrid, Spain.

      Spain has seen hundreds of protests since the "Indignados" movement erupted in 2011, marches and sit-ins are now common sights in the capital.