The ugliness in Europe over Greece and the Euro is reaching a breaking point. As Paul Krugman points out, Germany and the troika are making demands that seem to make Grexit the most attractive of a series of increasingly horrible proposals.
One of the biggest issues at play is about sovreignty–not just Greek sovereignty, but German as well. The Greek case is obvious: the top trending hashtag on twitter as I write this is #ThisIsACoup, making the altogether correct point that the troika’s utterly unreasonable austerity demands constitute nothing less than a cold war assault designed to make an example of Greece and drive Tsipras’ left-populist government out of power.
The German stand is also politically motivated and ultimately sovereignty-based. Why should the independent nation of Germany use German taxpayer funds to bail out Greek foreigners who joined the Eurozone using fraudulent economic data (albeit fraud aided, abetted and made possible by Goldman Sachs, which should be forced to pay for its crimes)? That’s a particularly pressing question for German chancellor Angela Merkel and other German politicians approaching a domestic election soon. If German citizens find the prospect of floating Greek debt long enough for Greece to make a recovery unpalatable as a matter of their own sovereign wealth, it’s hard to expect German politicians to take Greece’s sovereignty more seriously than their own.
But then, that’s the problem with sovereignty–particularly when you’ve decided to embark on a project involving a unified regional currency.
In the U.S., wealthier (mostly blue) states like California that contribute more to the federal government than they get back could in theory demand to be paid back, plus interest, by (mostly red) states like Alabama that take in more tax money than they pay back. California could hold that money against Alabama and demand massive austerity measures from Alabama until its debt is made whole.
But we don’t do that, because the people of California are in a political and economic alliance with Alabama under a single nation-state with a single currency. Alabama will never have to replay its debt to California, and that is OK. That comes as part of the territory.
The problem comes when you have nation-states joined in a single political entity with a single currency, that still consider themselves sovereign entities.
If Germans don’t want to be on the hook to bail out Greeks with their sovereign wealth, they need not to be joined at the economic hip with Greece via the Euro and the EU. If the Greeks don’t want to be subject to the unified political demands of the Eurozone (just as some states chafe under the policies decided in Washington DC), then they need not to take the benefits of being part of a single unified political entity with more powerful and more prosperous neighbors.
If precious national sovereignty is going to trump doing right by people, then it’s best that Germany and Greece sign a political divorce via Grexit and be done with it.
The alternative would be to put the ideal of sovereignty away, and join together in a more cohesive democratic union that puts everyone in the same boat to sink or swim together.