ATHENS — For decades, a large bomb
sat under a gas station in a densely crowded neighborhood near the
heart of Thessaloniki, Greece’s second-largest city. Last Sunday, the
authorities evacuated some 72,000 residents from the area so a military
explosives disposal crew could defuse the 550-pound bomb and take it
away. It was reported to have been dropped in an Allied raid in World
War II, when Greece was under German occupation and members of
Thessaloniki’s ancient and flourishing Jewish community were being murdered in camps in occupied Poland.
In
Greece, the wounds of history are never far from the surface. And this
small country on Europe’s periphery sits squarely on the fault lines of
the many difficulties that face Western democracies today. For seven
years now, Greece and its creditors have failed to defuse the European
Union’s first great crisis since the euro was adopted, despite the
biggest bailout of a debtor in history. Donald J. Trump’s election, the
Brexit vote and the inexorable rise of anger and aggression in the
politics of many nations further undermine the European Union and
threaten the achievements and promise of liberal democracy itself.
The last time a political system was under such stress was in 1989, when the collapse of the Berlin Wall
revealed the bankruptcy of the Communist system. What liberal democracy
and the open economy face today is not the failure of their promise of
stability and prosperity for ever greater numbers of people — it is not
the system that is exhausted but those who should protect it from its
failings and from its enemies. Nowhere is the array of problems and the
lack of leadership more evident than in the case of Greece.
Even
as the Thessaloniki bomb was being dismantled, Greek officials and the
representatives of foreign creditors were stuck in the latest of a
seemingly endless series of talks
aimed at releasing bailout funds in return for Greece carrying out more
economic reforms and imposing further austerity. Failure to reach a
deal could mean Greece defaulting in July on debt payments to the
European Central Bank, other creditors and investors. This could prompt
the country’s exit from the eurozone, something that previous talks were
believed to have settled. But the Greek crisis is even more
significant: It reveals the dangerous rifts among major players and the
lack of leadership and vision at the European Union level.
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The
problems that many European countries face today are present in Greece:
the attractions of populist politics and the dead ends to which they
lead; the shock of mass immigration and the reactions to it; an
unpredictable United States administration that might swing between
isolationism and intervention; the strains of economies that cannot
sustain the promises of the past. These dynamics have shaped Greece’s
domestic politics and the country’s relationship with its European Union
partners, leading to today’s dangerous impasse.
The
European Union’s inadequate response to the Greek crisis was always a
greater danger to the union than the failure of a member state with a
small economy. First, Greece’s dependence on debt was not dealt with
until it had become too big to handle. Then, when crisis struck, the
leaders of rich countries (most notably Germany)
chose to save their banks, which had lent money to Greece, while
presenting the issue as a moral failure on the part of the spendthrift
Greeks — who, after great sacrifices, are now suffering under greater
debt than before.
Whatever
the responsibility of the Greeks and their successive governments,
playing with such sentiments released hidden emotions into mainstream
politics in many countries (not least, Greece and Germany). Technical
economic issues that should have been handled by the mechanisms of a
shared currency suddenly became politically flammable.
With
European Union officials choosing not to close ranks around Greece in
2010 and deal with its debt as an in-house affair, the situation here
today is worse than ever. But there is also greater divergence between
European Union members and the International Monetary Fund.
It
is not clear whether President Trump will want the I.M.F. to stay in
the Greek bailout program; he seemed to express opposition to this in
2012, when he tweeted,
“Greece should get out of the euro and go back to their own currency —
they are just wasting time.” His enmity toward the European Union is no
secret, with his praise for Brexit and criticism of German dominance of
the union. Germany, which is Greece’s main national creditor, says that the I.M.F. must remain in the program.
The
I.M.F. will do so only if there is significant debt relief for Greece —
which Germany will not contemplate. Without debt relief, Greece must
force further austerity on an exhausted population, but its government says
it will not do this. Unless one of the three backs down and loses face
with its own constituency, the failure of the Greek program — and a
Grexit — looks inevitable.
Germany
faces national elections this fall and is not likely to favor debt
relief for Greece. The Greek government may go for broke, calling
elections instead of signing a deal. That would solve nothing and might
make Grexit inevitable. With Britain’s departure already underway, and
with anti-European Union parties looking strong in the Netherlands,
Italy, France and elsewhere, this would be another blow to the union.
On
March 25, the member states’ leaders will meet in Rome to commemorate
the treaties signed in that city 60 years ago, which set the Continent
on its path toward union, unprecedented peace and prosperity. “United we
stand, divided we fall,” Donald Tusk, the president of the European
Council, declared in a letter
to the 27 leaders last month. In Rome, under dark clouds of
disagreement and uncertainty, they will discuss a “white paper” on the
future of their union.
To
deal with today’s challenges, though, Europe’s leaders will have to
acknowledge the twin plagues of overreach and complacency that brought
them to this dangerous point: overreach in going for the grand gesture —
a currency union, ambitious expansion to include former Eastern Bloc
countries, open borders and global markets; complacency about the
consequences — neither within each nation nor at the European Union
level.
Now
economic problems, immigration and aggressiveness strengthen
nationalist demagogues everywhere, causing further disruption inside
countries and between them. It will take a very strong declaration of
faith to change this, to inspire people to defend the union. If the
European Union’s strengths and weaknesses — along with the perils that
its collapse would cause — are not at the center of domestic political
campaigns, Europe will not hold together. Solving the riddle of Greece,
getting the country back on its feet without taxpayers elsewhere feeling
cheated, would be a convincing sign of a new determination.
Greece
lies like a bomb in the European Union’s foundations. The choices are
defusing it, wishing it will go away ... or waiting for the blast.
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