Double or Quits

Note kindly translated by Anne-Marie de Grazia

The Greek government is presently heading a conflict against austerity, represented in Greece by the « Troïka, » an association of the IMF, the ECB and the European Commission. It is now obvious that we are going to see some dramatic moments. To some extant, this is playing to the Russian roulette, or double or quits.

Greece en Germany face to face

The Greek government announced on February 19, in seeking a prolongation in European loans, its will to « narrowly cooperate with the European institutions and the IMF, » as well as to « honour its financial obligations towards its lenders. » It has committed itself to « fully finance any new measure while abstaining from all unilateral action which would undermine the budgetary goals, economic recovery and financial stability, » while implementing « flexibility » allowing « substantial reforms » in order to « reestablish the standard of living of millions of Greek citizens.» [1]. The wording seems to have been thought through with millimeter precision. In fact, the Greek government is ONLY committing itself to maintaining its primary balance in equilibrium, but does not give up on its will to use the sums earmarked for the payment of interests and principal of the debt to finance social measures. In reality, there is no change as to the substance. Which is why the German government has already announced its opposition to this request. The quick reaction of Schäuble, the Minster of Finances is revealing. But more so notes leaked by Reuters and Edward Conway of Sky News. In these notes we are learning what Berlin wanted: a complete and total surrender.

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Never since the 1914 ultimatum from Austro-Hungarian Empire to Serbia or the ultimatum sent by Nazi Germany to Yugoslavia and Greece before the 1941 invasion have we seen the same willingness to radically destroy the will and the sovereignty of a country by another one.

We are reaching from now on the heart of the problem. Germany has made out of the Troïka and austerity the alpha and omega of its policies, because these measures guarantee its predominance over Europe. In making purely formal concessions, the Greek government unmasks the attitude of Germany and hands back to Germany the responsibility for a conflict [2]. For it is hardly probable that Germany will give in on this point. In fact, the Greek government has just set a trap for Germany. The purely formal concessions it is offering put the emphasis on German rigidity. But to understand why and how, it is important to have a look on an important book just published by two well-known economists, one of them being a newly elected representative of SYRIZA in Greece.

An important book.

A recent book by Costas Lapavitsas and Heiner Flassbeck, published in English, shows clearly the central question, for German politics as well as for Europe, of the « regime of the Troïka: » Against the Troika. Crisis and Austerity in the Eurozone. Published by Verso, London [3].

A - Lapavitsas-Flass

Costas Lapavitsas is a professor of economics who teaches in London at SOAS. Esteemed and respected by his colleagues, he has taken up in recent years radical positions on the question of the management of the debt crisis in the Eurozone. He has published together with his colleagues numerous reports and documents, such as Crisis in the Eurozone, in 2012. He was elected on SYRIZA’s list in the elections of Janurary 25. Heiner Flassbeck is a German economist who was vice-minister of Finances in 1998-1999 then lead the center for economic research of UNCTAD in Geneva until 2012. This book additionally contains prefaces by Oskar Lafontaine, former leader of the SPD and founder of Die Linke and by Paul Mason, as well as a postface by Alberto Garzon Espinosa. It has become quite impossible to maintain that the reflexions sustaining the Greek government are coming from « marginals, » whether from an academic or even from an institutional standpoint.

This book is a very important contribution to the analysis of Euro-austerity generated by the single currency and wanted by Germany because it draws from it an immense profit. This policy is described as neo-mercantilism. It generates in fact extremely powerful deflationary pressures on all of the economies of the Eurozone. This book presents in several chapters a complete picture of the origins of Euro-austerity as well as of its effects, both on the European and on the world economy. It allows one to understand the asymmetric effects of the policies of austerity in Germany and in the other countries. From this point of view, there is a great kinship between the work of Lapavitsas and Flassbeck, and the work of Jorg Bibow[4]. This book insists properly on the disastrous consequences which the Euro could have for Europe. This point is particularly stressed by Oskar Lafontaine, who was one of the « fathers » of the Euro and who, in his preface, insists on the fact that the Euro carries with it the death of Europe.

A decisive Eurogroup?

The meeting of the Eurogroup which will be held on Friday, February 20 will be in this regard a decisive moment. We will see clearly where the various governments take stand. For France, it is clear that will be on the side of Germany. Granted, all the while repressing sobs. Sobs are cheap. But the alignement on Germany will probably be total. We shall see, then, if the Greek government holds the line which it has itself defined, and if it is ready to take on the consequences. It is possible that negotiations will go on until Feburary 28, but then we will have a very clear view of how they will proceed: German intransigence will bear the immediate responsibility, just as the economic policy of Germany is bearing the long term responsibility of the crisis and break-up of the Eurozone.


[2] Godin R.,


[4] Whose: Bibow J et A. Terzi (eds.), Euroland and the World Economy—Global Player or Global Drag? Londres, Palgrave, 2007 is a must read.

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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