The fear factor

Print pagePDF pageEmail page

Mr. Nikos Konstandaras is managing editor and a columnist of Kathimerini, the leading Greek morning daily.  He is also a contributor to The BusinessThinker.com

This editorial is also published in Kathimerini.

The crisis that paralyzed Greece, is rocking Europe and threatens its greatest achievement the euro is not so much a debt crisis as it is an issue of fear. Our country, our continent and the global economy are gripped by unreasonable fear, by panic. Even though they have ways of placing the problems in their real context so that they can then handle the situation, everything seems to conspire toward increasing insecurity. With half-measures, paralysis, denial and fear, with ideas and proposals that one day are sacred and the next garbage, no one can predict what tomorrow will bring. We have no faith in our leaders in Greece, nor in Europe. Panic spreads and we stagger from one mistake to the next.

The Greeks are afraid of being isolated and poor; our European partners fear that we will drag them down and destroy the euro; Europe’s creditors are afraid of losing their investments and they press for ever higher yields on our debt;   America shivers at the thought that Europe’s instability will shake its own heavily indebted system; China sees the crisis in Europe hitting its exports; the price of oil goes down and gold goes up on fears of recession and devaluation.

Everyone’s afraid of Germany, which appears unaffected by any fear that it will be hit by today’s troubles. In fact, Germany appears to fear only one thing, that which almost everyone else believes will save the euro, the indebted countries and the European Union itself: allowing the European Central Bank to pick up debt and print money. This would ease the pressure on individual countries, allowing them to borrow at viable levels. Germany is afraid of the high inflation and social unrest that printing money could cause. In other words, it is afraid of its past (the troubled years that saw the rise of Hitler) and the future. It ignores th present: if eurozone countries collapse, the waves of poverty and despair will wash over Germany too. The Germans’ development depends not only on their own strict economic policies, but on their union with their partners. Their surplus is equal to the combined deficits of Greece, Italy and Portugal.

But because everyone is afraid of Germany (and respectful of its money), and because they understand that the Germans will change their minds only when they are convinced that other eurozone countries want to copy their strict policies, they adopt their proposals. Greece’s debt writedown, strict austerity and the curbs on the ECB’s mandate were all German ideas. The austerity imposed on Greece — a country unable to manage its problems as well as its potential for development — brought a deep recession. This has, in turn, frightened other countries and their creditors.

The measures imposed on Greece had two aims: to be seen as punishment, so that no other country would want to take the same road, but also to place a limit on what Germany and others would have to pay to support Greece in the future. This may have allowed Chancellor Angela Merkel to persuade her skeptical compatriots of the need to prop up Greece, but it also provoked intense suspicion between Germans and Greeks, and it inspired negative stereotypes on both sides and across Europe The worst thing, though, is that with this policy, all holders of European debt were increasingly unsure that they would get back what they expected. This fear is the disease that is spreading from one country to the other, across the world’s markets, freezing everyone the way a mouse freezes before a python.

Greece has huge problems, which must be solved immediately, but, on its own, it could not have caused the damage that Europe now faces. It is the reactions of others — mistaken tactics and policies driven by fear — which compounded the Greek danger. In Greece, we are afraid that the crisis will have no end, that no one knows where we are going, that we may find ourselves outside the eurozone. Consumption is frozen, investments are dead an the recession is much deeper than the austerity measures warrant.

Whatever happens in Europe and to the euro, we Greeks have to fix our country. In the face of mortal danger, it is a luxury (perhaps a fatal one) to continue to fear each other, to fear our European partners and for our partners to fear us.

Leave a Reply

Your email address will not be published. Required fields are marked *