Grexit: The bell is tolling for Greece – but it’s tolling for Europe now too

 

Monaco – It is surely beyond odd that Alexis Tsipras – Marxist firebrand Premier of Greece – and I share a guilty pleasure: the works of Ernest Hemingway. When pressed to the wall recently by his increasingly deranged Eurozone creditors, Tsipras replied in his maddeningly intellectually superior way that they should re-read Hemingway’s great 1940 novel of the Spanish Civil War For Whom the Bell Tolls, as though this clinched the argument for Greece’s intransigence.

 

And though it kills me to say it, I think I understand what Tsipras was on about. At its great ethical base, the novel is about the fundamental interconnectedness of things. The Spanish Civil War mattered to the American hero Robert Jordan because, by failing to stop Franco’s fascism in Spain, the movement’s cancerous growth across Europe (in the more sinister guise of Hitler) was a foregone conclusion. The little war in Spain could not (and must not) be separated from the coming world war.

 

For Tsipras, the suffering of the Greek people and their ultimate fate cannot be separated from the future of the euro, and the historical trajectory of the European project as a whole. And here we come to the heart of the matter. For it is only a scant few years ago that the Bush administration decided to let Lehman Brothers go under (for all sorts of similarly good ethical reasons that also involved moral hazard), thinking rules could be upheld with little economic risk.

 

This miscalculation ignited the worst economic calamity since the Great Depression. I must admit the fact that analysts and governments – like the fruit flies that they are – seem to have immediately forgotten this core lesson is entirely unnerving. We may again find the world is more interconnected than is comfortable.

 

And even if there is not immediate contagion as a result of Greece’s now likely exit from the euro, something profound will have fundamentally changed. The euro will forever cease to be a currency whose membership is beyond doubt; instead it is morphing into an exchange rate mechanism, where the market, vulture-like, will constantly be on the lookout for the next shoe to drop, be it Italy, France, or Spain.

 

The unsatisfactory and not entirely translatable notion of “solidarity” that theoretically underpins the whole project is being banished from any serious person’s thinking, shown to have been a fraud. The Grexit crisis proves beyond doubt that no one in Europe – least of all dominant Germany – is prepared to make serious sacrifices for the union when times get rough. As such, Europe is nothing more than a paper tiger.

 

Which leads us back to Hemingway and interconnectedness, for no one comes out of this calamity looking good. Yes, the Greeks lied about their numbers to get into the Eurozone in the first place; but the creditor states didn’t much care. Yes, Athens should not have borrowed money like a drunken sailor, but German and French banks were more than happy to lend it to them. Yes, Greeks should not get to retire in their 50s with German-sized pensions (and without German productivity), but Greek economic fecklessness is hardly a new phenomenon Brussels was unaware of.

 

Finally, yes, Tsipras and his even more overrated finance minister Yanis Varoufakis are pathetically hiding behind their people in proposing a plebiscite on the creditor’s terms, rather than leading as statesmen ought to do. But the long commented-upon democratic deficit in EU institutions means such a cowardly strategy actually has some merit.

 

The bell is tolling for Tspiras and his Syriza party, who will surely squander the benefits of the upcoming devaluation of the new drachma relative to the euro in a series of Marxist fantasy policies, when what they ought to be doing is collecting taxes and launching structural reforms (which they will never do). Greece will become just another poor Balkan country; and that is a tragedy.

 

But the bell is not just tolling for the Marxist schoolboys in Athens. By failing to master a crisis that ought to have been dealt with ages ago (debt relief for structural reforms, anyone?), Europe has destroyed any claim it might have had to be the future; frankly, it now becomes an open question as to whether Europe has a future, as it surely has proven it simply cannot take effective decisions in a crisis.

 

So yes, Tsipras is on to something. Europe thinks the bell is tolling for Greece; but it tolls for thee.