“History will be kind to me because I intend to write it myself,” said Winston Churchill. And he acted accordingly. However we do it, politicians usually care about their reputation. Leaving active action, they often present their own version of events in their memoirs. Each in his own way.
See also: Schäuble memoirs: The background to Varoufakis, Grexit, referendum and Tsipras “recognition”
As Deutsche Welle writes, in the mid-90s Germany was anxiously awaiting the memoirs of Hans Dietrich Genser. What would the Western world’s longest-serving foreign minister have to say about world-historical events such as the reunification of Germany and the breakup of Yugoslavia?Not much, as readers of a rather bureaucratic pain in the ass, filled with disinterested memos, eventually discovered.
In the year 2024 and after his death, Wolfgang Schäuble leaves a different legacy. He does not ignore the great dilemmas, he does not remain silent on critical questions. As far as Greece is concerned, he confirms his insistence on a “temporary exit” from the euro. His argument: “A shock is easier to deal with than years of austerity programs.” Or, as a traditional German saying goes, “better an end with horror, than a horror without an end.”
Fiscal discipline, but also “haircuts”
In essence, Wolfgang Schäuble repeats his fixed doctrine, that each eurozone member country must do its “homework”, to regulate its house, to shield its competitiveness. At the same time, however, he claims credit for his contribution to the 2011 “haircut” towards private creditors (PSI), which put Greek debt on a sustainable path for the first time.
In this he was not wrong, despite the collateral losses for small bondholders and insurance funds. In an earlier note we pointed out that the “haircut” by Wolfgang Schäuble and Evangelos Venizelos achieved the unthinkable until then: To “relieve” the Greek debt by 100 billion euros, without perceiving the essential inability to pay as a credit event.
But even the admonitions for fiscal discipline were not unreasonable at a time when the European partners were called upon to grant the largest loan given in the history of mankind.
Nothing more permanent than temporary
Wolfgang Schäuble was wrong on one crucial issue, however: Exiting the euro would neither be a relief for the Greek economy, nor would it be temporary. Really, does anyone think that in times of the outbreak of the pandemic or times of geopolitical confusion due to Ukraine, with defense spending suffocating state budgets, European partners would rush to prioritize Greece’s reintegration into the eurozone?
And if Greece really remained outside the eurozone: One believes that it could compete in tourism and light industry with its neighbors (Turkey, Bulgaria, Albania, North Macedonia, Egypt) with the main weapons being low costs and the continuous devaluation of the national currency ; That is, the recycling of economic impoverishment, especially for the lowest incomes?
Membership in the eurozone offers privileged access to valuable capital. As long as these funds are directed to production and innovation, not to careless consumption. Let’s not forget this at a time when Greece is recovering from the crisis, but insists on the production model it followed before the crisis, absolutely vulnerable to the fluctuations of the economic cycle. And with the threat of debt lurking, no later than 2033, when the interest on older loans that were “frozen” under favorable arrangements for Greek public debt become due and payable.
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Source: DW
#Deutsche #Welle #Schäuble #Greece
