Note kindly translated by Anne-Marie de Grazia

The agreement apparently reached at by Greece and its creditors on Tuesday, August 11th, after lengthy negotiations, is a bad agreement. This is actually Yanis Varoufakis opinion[1]. The 85 billions foreseen in this agreement are, at present, woefully insufficient. It could not have been otherwise. For this text is the logical conclusion of the diktat imposed on Greece on July 13th, 2015, by its creditors. And this diktat was never conceived with the aim of bringing true support to Greece, even at the price of enormous sacrifices, but solely in order to humiliate and discredit its government. This diktat is the fruit of a political vengeance and is plainly devoid of economic rationality.

Doubts are already being voiced on this agreement which must be ratified by August 20th. It has been denounced at length in various columns[1]. It will increase austerity in a country where the economy is in a free fall since the maneuverings of the European Central Bank beginning on June 26th. The IMF is forecasting another round of depression for year 2015, with a fall of GDP of -2,5%, and another one in 2016. And it is clear that such estimates are conservative. The actual truth could be considerably bleaker. In such a context it is clear that increasing the tax levy in an economy in recession is nonsensical. The VAT hike is to destroy what was left of output potential. One should, in the contrary, massively inject liquidities into the economy in order to jump start production. Everybody knows this[2], the Greek government as well as its creditors. Yet the latter persevere in their error. Why?

The responsibility of Germany

One often points at the responsibility of Germany. In fact, Germany insists on tying this agreement down to a strict conditionality, when the conditions put to the previous help plans since 2010 have resulted in a 25% drop in GDP and an explosion in unemployment. Similarly, Germany wants to impose on Athens an important pensions-reform, when these same pensions are playing the role of shock-absorbers in the crisis, in a country where intergenerational transfers are replacing unemployment benefits which have become very scant. This will result in impoverishing a little bit more the population and deepening the recession. Finally, Germany wants to impose wide-ranging privatizations. It is clear that the latter would allow German companies, which are far from being choir-children when it comes to Greece (the Greek branch of Siemens being at the heart of an enormous tax scandal) to proceed with its shopping-list at ramshackle prices. One can see that incompetence seems to reach hands with cynicism.

The responsibility of Germany is evident. In fact, the only hope – if Greece is to remain in the Eurozone – would be to annul a large part, between 33% and 50%, of the Greek debt. But the German government wants to hear nothing about this at the very moment when it is becoming known that it has drawn large profits from the Greek crisis, as acknowledged by a German expertise institute[3]. Yet there is something in the murderous obstination of the German government towards the Greek people going far beyond the « rules » of very conservative management, or of special interests. In fact, the German government wants to punish the Greek people for having brought to power a party of the radical left. In this, there is a clearly political will at work, not an economic one. But the German government also wants to make an example out of Greece, while putting its sight on Italy and France, as noted by the former Minister of finances, Yanis Varoufakis[4], in order to show who is the boss in the European Union. And this is most alarming, indeed.

The declarations of Romano Prodi

In this context, the declarations of M. Romano Prodi denouncing in the Roman pro-governmental newspaper, Il Messagero, what he is calling the « German blitz » must be examined attentively [5], but also with some suspicion. When Romano Prodi, who was president of the European Commission and Prime-Minister of Italy, denounces the behaviour of the German government, saying that the latter is putting into question the very functioning of the Eurozone, there is little to retort to this. But this questionable behaviour of Germany is by no means analysed for that, which it is revealing. Indeed, the German government is going about destroying the Eurozone, in its form and in its spirit. But if it acting in such a way, it is because it has no other choice. For acting differently would be tantamount to accepting what Romano Prodi is implicitly proposing, namely a federal organization of the Eurozone. However, this is not possible for Germany. If one doesn’t want the Eurozone to be the straightjacket which it is presently, allying economic depression to austeritarian rules, it would be necessary indeed for the countries of the North of the Eurozone to transfer between 280 and 320 billion Euros per year, over a period of at least ten years, to the countries of Southern Europe. Germany would have to contribute to this sum probably to the tune of at least 80%. This means that it would have to transfer every year 8% to 12% of its GDP, depending on hypotheses and estimations. One must state flatly that this is not possible. All those who burst into the great lamento of federalism in the Eurozone with sobs in their voices or with martial posturing have either not done the sums, or they cannot count very well. One can, and one must criticize the German attitude towards Greece because it amounts to a political vendetta against a legally and legitimately elected government. But to demand from a country that it transfer voluntarily such a proportion of the wealth it produces every year is not realistic.

Romano Prodi is no fool

Now, Romano Prodi is certainly no fool. Those who remember his intervention in Russia, at the Valdai Club in 2013, know that his is a rare intelligence, and moreover that he knows his way with numbers. Why, then, does he persist on this path, and why does he call on an axis between Rome and Paris in order to rebalance the ratio of power? Yet, Romano Prodi knows full well that one will not find in the French government a resolute partner for confronting Berlin [6]. Ever since September 2012, and the vote on the TSCG, it is clear that François Hollande has no desire, nor any intention, to engage Mrs Merkel in conflict. His actions, or more precisely, his inaction, tell us so every day.

So that we must admit that what Romano Prodi is doing in reality is politics, and moreover, Italian domestic politics. He knows that the question of the Euro is today directly and openly on the table in Italy, be it objectively, in the degrading economic results, or subjectively, in the multiplication of Euro-critical positions being taken, from the Left (with the appeal by Stefano Fassina) to the right and to the Northern League. We must see in his position the lighting of a backfire against the slow but deep change in public opinion and political opinion on the question of the Euro. But, in order for this backfire to be effective, it needs to come together with a few truths. Whence his analysis, which is not wrong, of the consequences of the German attitude about Greece. Yet one can see that his analysis is deliberately not pushed to its logical conclusions.


One can therefore see through the game played by Romano Prodi. But the one of Wolfgang Schäuble is by no means different. The German finance Minister has understood the risk for his country that out of the Greek crisis a powerful movement towards federalism could emerge within the Eurozone, with all its implications. And he wants no such thing to happen, not under any circumstances, and in this, he is in perfect agreement with the Chancellor as well as with the leader of the SPD, Sigmar Gabriel. So, be it Romano Prodi or Wolfgang Schäuble, both leaders are reduced to lighting backfires. But what is new at present, it the fact that their actions can no longer be coordinated. They will crash one against the other, and from this strategic disarticulation a political disarticulation of the Euro project will follow.

Romano Prodi is seeking to avoid or to slow down the constitution of such a front of anti-Euro forces, rising in public opinion as well as in the political field, in Italy as well as in Europe. Wolfgang Schäuble is intent on avoiding entering into the logic of a transfer union, which would be deadly for Germany. The only alternative would be for Germany to scuttle itself the Eurozone. So that both of them pretend to be talking about Europe and the Euro, when they are in fact thinking within a national framework. Need one a better proof of the death of the Euro, but also of the failure of a certain idea of the European Union?


[1] See Godin R., « Grèce : pourquoi le nouveau plan d’aide est déjà un échec » in La Tribune, 4 August 2015, or Robin J-P, « Pourquoi le Grexit est plus que jamais d’actualité » in FigaroVox, 4 August 2015,

[2] Even a newspaper which has accustomed us to very conservative views on this point admits as much. See :

[3] « Greek Debt Disaster: Even If Greece Defaults, German Taxpayers Will Come Out Forward, Says German Assume Tank » in Observer,

[4] See the transcription of his teleconference at the OMFIF or Official Monetary and Financial Institutions Forum

[5] Prodi R., « L’Europa fermi l’inaccettabile blitz tedesco », Il Mesaggero, 8 August 2015,

[6] Godin R., « Grèce : y a-t-il un vrai désaccord entre Paris et Berlin ? », in La Tribune, 3 August 2015,



Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s'est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

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