Part II in the series (Part I here)
The Greek crisis is the clearest expression of the failure of European asabiya. Yes, the Greeks bear a lot of responsibility for getting themselves in a mess. They have been profligate and they racked up a huge debt. They elected corrupt and dishonest political leaders.
Yet, in the last five years they have been paying up for their sins. As a respected economist Simon Wren-Lewis writes,
since 2010 Greece has done most of what the Troika asked of it. In particular, changes in its government’s underlying primary budget balance (i.e. the degree of austerity enacted) have been greater, by a long distance, than any other European economy. For many outside Germany what has happened to Greece as a result is hardly surprising: austerity is contractionary, and austerity on steroids is ruinous. …
After dutifully taking the medicine for years, and seeing the collapse of their economy, finally the Greek people could take no more. Confronting this reality has been too much for Germany. So instead it has created its fantasy, a fantasy that allows it to cast its failed experiment to one side, blaming the character of the patient. …
So powerful has this fantasy become, it is now driving German policy (and policy in a few other countries as well) in totally irrational ways. In particular, Germany refuses to discuss debt relief with Greece, yet seems quite happy to see Greece leave the Eurozone, the inevitable consequence of which would be that Greece would obtain much greater debt relief through default. Talk about cutting off your nose to spite your face. What is driving Germany’s desperate need to rid itself of the Greek problem?
Leo Tolstoy famously wrote in Anna Karenina, “All happy families are alike; each unhappy family is unhappy in its own way”. The European Union is an unhappy family in many ways. I’d like to discuss two.
The first one has to do with deep history. The roots of the European identity go back to the Carolingian Frankish Empire. As I wrote in a recent post on Cliodynamica, the six European nations that established the European Economic Community in 1957 match almost perfectly with the boundaries of Charlemagne’s empire. After the Carolingian Empire fragmented, the various peoples who were part of it never again became part of the same state, but they retained a feeling of shared identity. When the French and German knights found themselves on a crusade in the Holy Land, they forgot about linguistic and political boundaries dividing them, and thought of themselves as part of Latin Christendom. Their enemies, the Muslims, also didn’t bother distinguishing among the different varieties of Crusaders, simply calling them Faranga – the Franks.
In War and Peace and War I proposed that we call such supranational groupings of people metaethnic communities. (It’s similar in many ways to Samuel Huntington’s ‘civilizations,’ but more general in that it includes large groupings of people without cities and literacy, such as the Iron Age Celts or Turco-Mongolic steppe nomads). What I am saying is that the European Union is based on the metaethnic identity that has deep historical roots, going back more than 1000 years. Starting from the core of the Carolingian Empire, this metaethnic group gradually expanded to include Spain, Portugal, and the Italian Mezzogiorno in the South, the British Isles in the West, the Scandinavian countries in the North, and Western Slavs to the East.
Just as interesting as it is to account who was in, we also need to remember who was out, because all metaethnic identities develop in opposition to other large-scale groupings. Latin Christendom had two kinds of enemies: the Muslims and the Orthodox Christians, each of them a separate metaethnic group (or civilization, in Huntington’s terms).
The “clash” between Latin Christendom and Islam is noncontroversial, but it is often forgotten that the split between western and eastern Christians is of almost as great antiquity. It dates back to the Mutual Excommunication of 1054.
Some of the most notable ‘achievements’ of Latin Christendom against the Orthodox Christians include the sack of Constantinople by the Fourth Crusade in 1204 and the unsuccessful crusade against Russia in the 1240s.
Crusaders loot the Cathedral of St. Sophia during the Sack of Constantinople in 1204. Source
Why is this ancient history important? Surprisingly, events that happened 1000 years ago help us understand the pattern in which Europe is falling apart today. The former Carolingian territories are the most cohesive core of the EU (although this should be understood in a relative sense; as I mentioned in the previous blog there are Eurosceptic minorities even in the core EU states of Germany and France). The regions that were included in Latin Christendom later are the EU periphery where most of the trouble spots are located.
The five eurozone countries that needed to be bailed out since 2009 are on this periphery: Ireland, Portugal, Spain, Greece, and Cyprus. One other member of the periphery, UK, is planning to hold a referendum on whether to leave the EU.
But Greece is even more peripheral to the EU. Unlike Catholic Ireland and Spain, Orthodox Greece was never part of Latin Christendom. The medieval Crusaders didn’t feel that the Byzantine Greeks were part of ‘Us.’ Today, the German finance minister Schaeuble doesn’t hide his desire for the Greek exit from the Eurozone.
And that’s why I think that history is important. Despite its initial promise, the European Union proved to be unable to overcome civilizational identities that formed 1000 years ago. This is why Greece is being forced to accept a much worse deal than Spain or Ireland.
It’s not the only reason for the current crisis of the EU. As I said in the beginning of this post, there are other reasons for why the European Union is an unhappy family. In the next installment I will talk about one of them, which is of much shorter historical depth than the metaethnic divide.
I agree that the similarity between the Carolingian Empire and the European Union core is more than a coincidence.
question is why are they both so similar.
the mechanism for the transmission of a unique “European” identity over 1000 years is not entirely clear, if there is supposed to be one.
do we have a list of “European” cultural traits that we can track down the ages?
an alternative hypothesis might state there are other reasons why this region keeps repeating as the “core” of an Empire or metaethic community, that have nothing to do with the transmission of a European identity.
Two populations have existed as neighbouring groups in some form since before the Carolingian Empire and before the Roman Empire: gauls and Germanic celts. Do we have any evidence of metaethnic relations in this region before the Roman invasion of gaul? What about the druids? (I seemed to remember reading they could travel between communities, although maybe I’m wrong).
Shared genetic history. The Rhine land population gives France and Germany a population with a shared genetic history. Frenchmen with surnames like “Wenger” had ancestors who considered themselves German. This population within France might be expected to be the “core” of the “core” if there is a European identity. Likewise, the Carolingians had a core with a shared genetic history. It might be the shared genetic history – or the cultural identity of individuals with a shared genetic history – that is the glue not any wider European identity. The major institutions of the European Union – Brussels (Parliament, Bureaucracy), Strasbourg (Parliament), Frankfurt (EU Bank) – are all located along the Franco-German border.
Functional explanation. Economic inter-connectedness – e.g. the Rhine river, the flat land and fast travel times across the North European Plain. France and Germany will be better off together than apart. Hallstatt and La Tene culture covered this region. In fact, this Hallstatt culture map looks like the Carolingian Empire/EU Core.
Ambitions for expansion meet geostrategic imperatives that leads both sides to each other. The Alps and Pyrenees separate France from Italy and Spain and Germany, the Alps separate Germany from Italy. It is the natural first move for Empire builders in both states to cross the Rhine because it’s less costly. France under Napoleon, Germany under Hitler both tried to conquer each other then the rest of Europe. The Napoleonic Empire and the German Empire were failed European unions.
Shared nemesis. The French under Napoleon were beaten by the Russians and the British and the Germans under Hitler were beaten by the Russians and the British (+ allies in all cases). Napoleon’s ambitions were to counter the early British Empire’s control of the seas, and Germany the late British Empire. The Russians and the British thwarted Franco-German plans for World Domination then and that is what the Franco-Germans fear now. Among Franco-Germans the strongest glue for union is the anti-Anglo-American and anti-Russian alliance. Is this an actual European identity that leads back 1000 years or a self-help group?
one might also argue that a shared set of traits of a “European identity”, if there are any, do not date back as far as the Carolingian Empire. this could be a recent phenomenon.
apologies if you have already countered these opposing arguments.
Edward, good point about Hallstatt – it looks like the European identity is even older than I thought!
yes, the Hallstatt map already has the exclusion of the celtic areas: Britanny in France, South West England, Wales, Scotland and Ireland.
today these regions only like the European Union to the extent it gives them their own national identity at the expense of the traditional “Empires” – Britain, France etc.
so it not only shows a proto-European identity it implies the more regional identities are equally ancient.
apologies for the lack of spaces between sentences. I added them, the blog comment software has not read them.
I like Simon Wren-Lewis a lot and 99% of the time he’s right but here I think he misses a few. For all practical purposes EU, and Germany specifically, have already given Greece debt relief. And bailouts. They just don’t want to get stuck in a position of having to do it over and over and over again (if for no other reason than the fact that at the end of the day they are democratic countries which have to respect to some extent the mood of the voters). Likewise, austerity in Greece was going to happen, barring an exit in 2007/8, one way or another – as someone else quipped “voting for anti-austerity party in Greece is like voting for an anti-earthquake party in Japan”. You can do it to make yourself feel better but it won’t change the fact that it will happen. If you’re running a deficit, and you can’t print your own money and nobody is willing to lend you money, cutting government spending or increasing taxes is going happen whatever name you give it (this does NOT apply in general, to countries which can borrow or control their own money supply, and on that point the anti-austerians are right)
I don’t hold the Greeks blameless, but when the German elites bailed out their own banks, they acquired the responsibility for the mess. You break it, you own it. The alternative was to let the banks to be punished for giving bad loans. Why should the common Greeks and common Germans pay for corrupt dealings of the banks and Greek elites?
unfortunately the entire Greek society lacks asabiya. it’s got a classic case. the examples of common and middle class corruption are outrageous compared to the norm in, say, Germany.
and, of course, the Greek elites are corrupt
“You cannot, therefore, place this entirely at the door of the EU – the country was a failed state before it ever got to be an EU member, and but for EU/international intervention, would now most likely be in a worst condition than it is. The great fear is that the Greek (and Italian) contagion will spread to and infect the rest of Europe (if it hasn’t already).”
is the failure of European asabiya actually a failure of asabiya in the Mediterranean rather than the core north European states? or is the failure of asabiya in the Mediterranean going to “spread to and infect the rest of Europe”?
in the UK our MPs have got a pay rise again …
… even while, with the EU and now the regional devolution plan, these MPs become less and less relevant.
“Osborne’s devolution plans herald English revolution”
They all want to be part of the elite class. and with the devolution they are creating more elite titles.
Agree with Peter.
Note that the Germans have given Greece numerous bailouts, but NOT debt relief (which is what Greece wants and needs). They’ve gotten only bailouts (which mostly go to pay back German and other northern European creditors) and austerity, which, as Paul Krugman has noted, has made digging themselves out of the their debt even harder for the Greeks (when your economy shrinks by some crazy amount like 20% but your amount of debt stays the same, paying back that debt become even harder).
So in short, the German banks have gotten bailouts while the Greek populace have gotten crushing austerity and sky-high unemployment.
Unfortunately for the Greeks, Syriza has been even more incompetent at negotiating and strategizing than even their most skeptical critics would have thought possible. I’m not sure you could come up with a worse endgame for the Greeks than the one they face now.
Edward: Great link to Hallstatt. Reinforces my view that the “core” is really only the Germanic lands+France (periphery consisting of Scandinavia, western part of Eastern Europe, Britain, northern Italy and northern Spain, but not southern Italy and southern Spain)..
Actually, no, it’s worse than that. Greece’s economy has contracted by 1/3rd, which is about what the US economy lost during the Great Depression.
I agree with Peter about distinct metaethnic groups in Europe – Latin Christendom and the Orthodox Christians that really don’t mix.
I think, it is not by chance Greece, Bulgaria, Romania (all Orthodox Christian) are the most problematic countries in the EU. The EU will have the same problems, if not bigger, with Balkan Orthodox Christian countries, and especially Albania since most of its population profess Islam. The same is true about Kosovars and Bosnians.
Apparently Germany’s appetite is so huge that it doesn’t want to draw any lessons and is looking to the ever more EU expansion. Germans must be quite confident that they will be able to crush each and every one of them if need be. It will be interesting to see how they will handle Muslims.
German chancellor to head to the Balkans
As the Greece crisis unfolds, German Chancellor Angela Merkel will travel to the western Balkans. The region currently resembles something of a club of EU aspirants – with economic and political issues aplenty.
High unemployment, widespread corruption and authoritarian political elites: these are things that Serbia, Bosnia-Herzegovina, and Albania share.
From the perspective of the West, according to Dusan Reljic, “Albania is a stability factor.” He expects Merkel to ask “in discrete fashion” that the Albanian Prime Minister, Edi Rama, refrain from speaking about Greater Albania, a highly disputed nationalist vision that incorporates into the Albanian nation not only Kosovo, but also parts of Serbia, Montenegro, Macedonia and Greece. )
This is to say nothing about the brilliant Merkel’s idea of beginning to incorporate the Ukraine which is Orthodox Christian except for its small western part bordering Poland.
Haven’t the Europeans learned that harsh virtually impossible repayment terms imposed on a stricken people and economy breeds resentment in said people that provides the fuel for radical sociopaths to seize power and wreak suffering?
I read that this deal was pushed through because the European elites want to teach Southern Europeans not to elect populists, but can’t they imagine a worse situation?
The Weimar Republic when it first came in to being was progressive for its time, but the harsh liquidationist austerity policies of Bruning (implemented because he wanted to comply with the terms that the Western allies had imposed with Versailles) made German unemployment skyrocket and made desperate Germans turn towards the false messiah of a authoritarian fascist. I hope no one has to be reminded of what happened next.
Does no one in Europe read history?
That’s one question; whether or not EU has been willing to give Greece “debt relief”. The other question (and these questions often get mixed up and of course they’re related) is whether “austerity” in Greece can be blamed on the Troika. As I wrote above, if you’re a country running large deficits, which has no currency of its own, and which then all of sudden gets cut off in its ability to borrow, it’s really just a matter of straightforward arithmetic that either taxes will go up or government spending will go down – in other words “austerity” – simply because nothing else can happen.
The anti-austerity argument may work if some of these assumptions are not true. The traditional Keynesian argument (whether one agrees with it or not) for expansionary fiscal policy does presuppose either the ability of the government to borrow or the ability to print currency, or both. It doesn’t apply in the case of Greece.
One possible argument here is that if Greece was given MORE (that word again) debt relief – say, the interest payments on its debt were suspended or something – then that would create enough wiggle room in the budget so that other kinds of spending wouldn’t have to be cut (or taxes raised). So “austerity” could be avoided. The problem with this argument is that debt service is actually not that big part (though not negligible) of the Greek government budget. Even under most generous debt relief terms from the EU, austerity was going to happen to Greece.
But I think we’re getting off topic here (and I apologize since it’s sort of my fault)
Richard, from a purely economic point of view, (1) “debt relief”, (2) “bailout”, (3) “offering loans at sub-market rates when no one else is willing to lend you money” are equivalent. They’re really different terms for what is essentially the same thing.
Suppose I borrow 100$ from a bank. My initial scheduled repayments consists of paying (a coupon of) 10$ for five years and then paying the principal of 100$ six years from now. “Debt relief” is when the creditor says, (1) “ok, how about you pay the 10$ for the next five years but then only pay back 80$ in year six”. “Offering a loan at sub market rates” is when some other creditor comes along and says (3) “ok, I will pay those 10$ per year for you, for the next five years, and in return you pay me 5$ per year for those five years”. “Bailout” is when the creditor says (2) “ok, you don’t have the 10$ in this year so I’ll lend you this 10$ so you can pay me back and then you pay me 11$ for the next four years”. You can jiggle the numbers (which I was a bit too lazy to do) to make all three scenarios equivalent in present value terms.
The EU has already given Greece a lot of (2) and (3) in some combination, and even some of (1). Basically, it is impossible to argue that “Germany” has been unwilling to forgive Greek debt. It IS possible to argue that they should’ve forgiven a lot more but that’s one of those “we’re now just haggling over the price” kind of things. In that case you need to specify exactly what “more” means in this context and how exactly it was suppose to have been achieved. As well as recognize the reality that the main thing about people who lend money out is that they tend to like it when it gets paid back.
(In fact if you read Wren-Louis carefully, he’s actually careful, although it gets buried in the rhetoric, to make the argument that “it wasn’t enough” rather than “there wasn’t any”)
OK, it wasn’t enough, then, but that’s also somewhat of an argument over semantics. If I have a loan of $100,000 and you offer to write off $100, that’s not very different from $0.
And of course people who lend money want to be paid back. But do people who make bad loans deserve to be paid back? Why is the suffering being borne almost completely by the Greek people when the (mostly northern European) banks who made the loans are arguably just as culpable but got bailed out instead?
Banking is so relatively complicated that most people cannot comprehend the technicalities. The technicalities are the shadows, and in the shadows monsters hide.
Monsters like the Libor fraud. We’re talking trillions there. Don’t ask me to explain it. You need a huge amount of education and some natural ability to work out what went on there. Apparently those responsible didn’t deserve to go to jail. We are left to trust those who have the smarts that that was the right decision.
Modern society is so hierarchical yet diversified into endless technical branches there are very few independent generalists who can spot what is happening in cases like Libor and lending Greece. Those who know what is going on in a big scam like the Libor fraud are either profiting from it, or not in a position to stop it.
And why would we want anyone in a position to stop it. Nobody wants a dictator.
Definitely cultural differences between the Germans and the French & Italians.
I wonder how much of it has to do with the latter 2 having a history of dealing with people with very different cultural norms: The Italians being split culturally already and the French with their big colonial empire and peoples. The Germans haven’t really had either.and seem incapable of negotiating with people with different cultural norms in a rational manner.
Richard, very interesting indeed.
Also check the Varoufakis’ interview if you haven’t yet ( it’s explosive!):
“There was point-blank refusal to engage in economic arguments,” he told The New Statesman’s Harry Lambert. “Point blank. You put forward an argument that you’ve really worked on, to make sure it’s logically coherent, and you’re just faced with blank stares. … You might as well have sung the Swedish national anthem.”
Same thing – talking past each other… as if they are speaking different languages….
Isn’t the reason that the EU is being tougher on Greece than other countries that’ve asked for a bailout (not several bailouts in a row, though) because Greece cheated to get into the Eurozone in the first place and nobody feels they can trust this country?
This is not a game of poker. Nothing was secret about the Greek economy only the Greeks knew. If there was cheating there must have been an enabler – you don’t get into the club without proof of soundness, and some party other than Greece had to provide the proof.
that enabler appears to have been a bank and the enabling some financial creativity called swaps. again, this is complicated technical stuff that lurks in the shadows of discussions because relatively few people understand what they are to know their significance or be comfortable talking about it.
One view is the EU Commission knew there would be problems and this crisis was deliberately orchestrated – Greece let in – in the knowledge there would be problems later that would cause a crisis that only political will for greater integration (more powers to the EU) could solve.
These are what Dr. Richard North calls “beneficial crises” that have been the driver of greater integration in the EU.
//the experience of 1973 tells us that the commission never forgets, and never gives up. It thrives on crises, whether terrorism, natural disasters, food safety or, in this case, energy problems, forever seeking to advance its own agenda on the back of whatever problem happens to be in the headlines. And here we go again, with that same cynical opportunism that Monnet was quick to harness. To the EU, every crisis is an opportunity, to the extent that the driving force of integration is what we have come to term “the beneficial crisis”.//
Google site: eureferendum.com “beneficial crisis” if you would like more examples.
Of course, a crisis in Greece, a country which does not have the same (pre-modern, medieval… ancient) history of “European” identity as the core countries in the EU, might not work so well as a crisis elsewhere. Their ability to get more integration on the back of crises will come unstuck at some point.