Paul Krugman on The New York Times: Killing the European Project


by Paul Krugman 

Suppose you consider Tsipras an incompetent twerp. Suppose you dearly want to see Syriza out of power. Suppose, even, that you welcome the prospect of pushing those annoying Greeks out of the euro.

Even if all of that is true, this Eurogroup list of demands is madness. The trending hashtag ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.

Can anything pull Europe back from the brink? Word is that Mario Draghi is trying to reintroduce some sanity, that Hollande is finally showing a bit of the pushback against German morality-play economics that he so signally failed to supply in the past. But much of the damage has already been done. Who will ever trust Germany’s good intentions after this?

In a way, the economics have almost become secondary. But still, let’s be clear: what we’ve learned these past couple of weeks is that being a member of the eurozone means that the creditors can destroy your economy if you step out of line. This has no bearing at all on the underlying economics of austerity. It’s as true as ever that imposing harsh austerity without debt relief is a doomed policy no matter how willing the country is to accept suffering. And this in turn means that even a complete Greek capitulation would be a dead end.

Can Greece pull off a successful exit? Will Germany try to block a recovery? (Sorry, but that’s the kind of thing we must now ask.)

The European project — a project I have always praised and supported — has just been dealt a terrible, perhaps fatal blow. And whatever you think of Syriza, or Greece, it wasn’t the Greeks who did it.

5 comments on “Paul Krugman on The New York Times: Killing the European Project

  1. Pingback: ΣΤΟΠ στη (δήθεν) διαπραγμάτευση! #‎TsiprasLeaveEUSummit‬ ‪#‎ExplainNoToTsipras‬ ‪#‎ThisIsACoup‬ | OMADEON

  2. Greek Debt Crisis: Germany Flexes Its Muscles in Talks With Bailout Ultimatum

    Updated July 12, 2015 10:32 p.m. ET


    Europe’s ultimatum to Greece, demanding full capitulation as the price of any new bailout, marks the failure of a rebellion by a small, debt-ridden country against its lenders’ austerity policies, after Germany flexed its muscles and offered Athens a choice between obeisance or destruction.

    Sunday’s statement on Greece by eurozone finance ministers will go down as one of the most brutal diplomatic démarches in the history of the European Union, a bloc built to foster peace and harmony that is now publicly threatening one of its own with ruination unless it surrenders.

    The weekend’s power play also highlights the cracks among Greece’s creditors—especially Germany and the International Monetary Fund—as the cost of keeping Greece in the euro spirals out of control. The IMF has urged Europe to give Greece some debt relief, something Berlin has opposed. Part of the reason for Germany’s hard line now is that maximally tough austerity in Greece could reduce IMF pressure to write off Greek loans.

    The other 18 euro members were late Sunday pushing Greece to implement all of the austerity measures and broader economic overhauls its voters have twice rejected—in elections in January and in a referendum on July 5—not in return for new rescue loans, but as a precondition for even talking about them.

    The Greek government of left-wing Prime Minister Alexis Tsipras, which has spent all year trying to challenge Europe’s bailout policies, has ended up a near-powerless pariah in Europe—even though Mr. Tsipras is politically dominant inside Greece. Its only remaining option for disobedience—to default and leave the euro—would satisfy rather than horrify many of its European critics, led by German Finance Minister Wolfgang Schäuble.

    Greece hasn’t complied with creditors’ demands yet. But its only alternative appears to be the gamble of a euro exit, which most Greeks fear would bring worse economic devastation.

    In the end, the telling factor in the standoff may be that Greeks fear their country’s exit from the euro more than Germany does. That gives Berlin the stronger hand to impose its austerity-and-reforms prescription. (my emphasis)

    READ all of Marcus Walker’s comments from the Wall Street Journal


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s